Justia North Carolina Supreme Court Opinion Summaries

Restaurants in North Carolina were forced to suspend operations due to COVID-19-related government orders. Each restaurant had a commercial property insurance policy with Cincinnati Insurance Company, which covered business income from any "direct physical loss" to property. The dispute centered on whether the government orders constituted a "direct physical loss" under the policy.The Superior Court of Durham County sided with the restaurants, granting partial summary judgment in their favor, finding that the losses were covered under the policy. The Court of Appeals reversed this decision, interpreting the insurance contract to exclude such losses and remanded the case with instructions to enter summary judgment for the defendants.The Supreme Court of North Carolina reviewed the case and disagreed with the Court of Appeals. The court held that a reasonable policyholder could expect "direct physical loss" to include the effects of COVID-19 government orders that restricted the use of and access to the restaurants' physical property. The court noted that the policy did not exclude viruses and construed the ambiguity in favor of coverage. Consequently, the court reversed the judgment of the Court of Appeals and remanded the case for further proceedings consistent with its opinion. View "North State Deli, LLC v. Cincinnati Insurance Co." on Justia Law

A clothing retailer, Cato Corporation, with over 1,300 stores, purchased an "all-risk" commercial property insurance policy from Zurich American Insurance Company in July 2019. In the spring of 2020, Cato alleged that the COVID-19 virus and related government orders forced it to close or severely curtail operations, causing significant revenue losses and expenses for remediation and reconfiguration of its stores. Cato sought coverage for these losses under its insurance policy, but Zurich refused, leading Cato to file a lawsuit seeking a declaratory judgment and damages for breach of contract and violations of North Carolina's Unfair and Deceptive Trade Practices Act.The Superior Court of Mecklenburg County dismissed Cato's claims on a Rule 12(b)(6) motion, relying on the Court of Appeals' decision in North State Deli, LLC v. Cincinnati Insurance Co. The Court of Appeals affirmed the dismissal, concluding that tangible alteration to the property was necessary to recover for a "direct physical loss of or damage" to property, which Cato failed to allege sufficiently.The Supreme Court of North Carolina reviewed the case and agreed with the Court of Appeals' decision to affirm the dismissal but disagreed with its reasoning. The Supreme Court concluded that Cato sufficiently alleged a "direct physical loss of or damage" to property under the precedent set in North State Deli. However, the Court found that the viral contamination exclusion in Cato's policy precluded coverage for the alleged losses. Therefore, the Supreme Court modified the Court of Appeals' decision but affirmed its judgment dismissing Cato's claims. View "Cato Corp. v. Zurich American Insurance Co." on Justia Law

Plaintiffs Nhiem Tran and Nung Ha had a fire insurance policy with Nationwide General Insurance Company. Nationwide canceled the policy due to property hazards, including an unfenced swimming pool and rotting wood. Nationwide mailed a cancellation notice on May 22, 2015, and terminated the policy on June 6, 2015. Plaintiffs claimed they never received the cancellation letter but did receive, sign, and cash a refund check for the excess premium over a month before their house burned down on July 24, 2015. Nationwide denied their insurance claim, leading to this lawsuit.The Superior Court of Wake County found that Nationwide had properly canceled the policy by mailing the cancellation notice, satisfying statutory requirements. The Court of Appeals reversed, holding that the statute required actual receipt of the cancellation notice. Nationwide appealed, and the Supreme Court of North Carolina remanded the case to determine the applicable statute. On remand, the trial court again ruled in favor of Nationwide, and the Court of Appeals affirmed, stating that proof of mailing was sufficient for cancellation.The Supreme Court of North Carolina reviewed the case and affirmed the Court of Appeals' decision but on different grounds. The Court held that plaintiffs had actual notice of the cancellation due to several factors: their prior knowledge of property hazards, receipt and cashing of the refund check, and the cessation of monthly premium withdrawals. The Court emphasized that actual notice was sufficient to meet statutory requirements, making the manner of giving notice secondary. Therefore, Nationwide effectively canceled the policy before the fire, and the judgment for Nationwide was affirmed. View "Ha v. Nationwide Gen. Ins. Co" on Justia Law

The Supreme Court of North Carolina reversed a decision by the Court of Appeals regarding the interpretation of a clause in the Financial Responsibility Act (FRA) about underinsured motorist (UIM) coverage. The defendant, Mr. Hebert, was in a vehicle accident where multiple parties were injured, and he sought to claim UIM coverage under his policy and his parents' policy. The Court of Appeals had allowed him to "stack" or add together the UIM limits from both policies to qualify his vehicle as underinsured. However, the Supreme Court disagreed with this interpretation.The court held that the FRA's plain language only permits the claimant’s UIM coverages that pertain to the vehicle involved in the accident, not all UIM policies for which the UIM claimant is personally eligible. Therefore, the defendant could not stack his policy’s UIM limits with his parents’ policy’s UIM limits to qualify his vehicle as underinsured. The court concluded that the defendant's vehicle did not qualify as an underinsured highway vehicle under the FRA, and he could not activate his policy’s UIM coverage. Consequently, the Supreme Court reversed the Court of Appeals' decision and remanded the case to the trial court for entry of judgment on the pleadings in favor of the plaintiff, North Carolina Farm Bureau Mutual Insurance Company. View "N.C. Farm Bureau Mut. Ins. Co. v. Hebert" on Justia Law

In this case, the Supreme Court of North Carolina was asked to determine whether defendant Cassie Herring, who was injured in a car accident, qualifies for benefits under the underinsured motorist (UIM) coverage of her mother and stepfather's automobile insurance policy. The policy defined an "insured" to include any "family member" who is a resident of the named insured’s household. The question was whether Herring was a "resident" of her mother's household.Herring was injured while riding in a car with her father, and the driver of the other car was insured. The other driver's insurance company tendered the limit of its policy to Herring. Herring then sought additional coverage under the UIM provision of her mother and stepfather's policy. The insurer, North Carolina Farm Bureau Mutual Insurance Company (Farm Bureau), filed a declaratory judgment action, claiming that Herring was not a resident of her mother’s household and thus did not qualify for the UIM benefits.The trial court granted summary judgment for Herring and her parents, and the Court of Appeals affirmed. Farm Bureau appealed to the Supreme Court of North Carolina, arguing that there were genuine issues of material fact about Herring’s residency.The Supreme Court of North Carolina agreed with Farm Bureau and reversed the decision of the Court of Appeals. The court held that the evidence, when viewed in the light most favorable to Farm Bureau, raised genuine issues of material fact as to whether Herring was a resident of her mother's household at the time of the accident. The court noted that there were discrepancies between Herring's testimony and the affidavits submitted by her and her parents, which created credibility issues that should be resolved by a jury. Therefore, the court concluded that summary judgment was not appropriate, and the case was remanded for further proceedings. View "N.C. Farm Bureau Mut. Ins. Co. v. Herring" on Justia Law

The Supreme Court affirmed in part and reversed in part the court of appeals' decision affirming in part and dismissing in part the judgment of the trial court determining that Insurers were obligated to defend and indemnify Radiator Specialty Company (RSC) under its policies by reimbursing $1.8 million of RSC's past costs, holding that the court erred in part.RSC sought compensation from the three insurers (Insurers) remaining in this action for liabilities it incurred as a result of litigation occasioned by bodily injury caused by repeated exposure to benzene, which RSC manufactured. At issue was which insurers were obligated to pay which costs arising from RSC's benzene liabilities pursuant to the terms of the Insurers' liability insurance policies. The Supreme Court held that the trial court (1) correctly applied an exposure-based approach in determining at what point Insurers' coverage was triggered; (2) properly applied pro rata allocation based on the policies; and (3) in finding that horizontal exhaustion - rather than vertical exhaustion - applied to one insurer's duty to defend. View "Radiator Specialty Co. v. Arrowood Indemnity Co." on Justia Law

The Supreme Court reversed the decision of the court of appeals affirming an order of the trial court granting summary judgment in favor of Insureds and against Insurer in reliance upon its prior decision in N.C. Farm Bureau Mutual Insurance Co. v. Gurley, 139 N.C. App. 178 (2000), holding that the lower courts erred.Matthew Bronson, who was intoxicated, collided with a vehicle owned by Pamela Dana, resulting in serious injuries to Pamela and William Dana, who was riding in the passenger seat. Pamela died from her injuries. At the time of the accident, Pamela was insured under a policy of automobile liability insurance issued by Insurer. William, individually and as administrator of Pamela's estate, claimed to be entitled to an additional $74,750 in underinsured motorist coverage over the amount that Insurer had already tendered to them. Insurer filed a complaint seeking a declaratory judgment regarding the amount of underinsured motorist coverage it was required to provide to the Danas. The trial court entered summary judgment in favor of the Danas, and the court of appeals affirmed. The Supreme Court affirmed, holding that the application of Gurley in this case was error. View "N.C. Farm Bureau Mutual Insurance Co. v. Dana" on Justia Law

The Supreme Court reversed the decision of the court of appeals affirming the order and declaratory judgment of the superior court in favor of Defendant in this personal injury action, holding that, under the circumstances, Defendant was not entitled to collect underinsured benefits.Defendant was a North Carolina resident who sought to collect underinsured motor vehicle coverage benefits from Plaintiff, her North Carolina insurer, after she was injured while traveling in Alabama in a car owned and operated by a Tennessee resident and insured by a Tennessee insurer. Plaintiff denied the claim and initiated a declaratory judgment action seeking a ruling establishing that the UIM coverage of its politics did not apply to Defendant's injuries. The trial court concluded that Defendant was not entitled to coverage under the UIM provision of her insurance contract. The court of appeals affirmed. The Supreme Court reversed, holding that because the amount of the stacked UIM coverage limits exceeded the sum of the applicable bodily injury coverage limits, the Tennessee driver's car was an "underinsured motor vehicle" as defined under North Carolina's Financial Responsibility Act for the purposes of giving effect to Defendant's contract with Plaintiff. View "N.C. Farm Bureau Mutual Insurance Co. v. Lunsford" on Justia Law

The Supreme held that the trial court did not err in determining that Defendants were not afforded underinsured motorist and medical payments coverage under an insurance policy issued by Plaintiff, an insurance company, to a family member.Defendants argued that they were entitled to medical payments and underinsured motorist coverage under Plaintiff's policy because they were "residents" of the insured's "household." Plaintiff disputed coverage and filed a declaratory judgment action in superior court, arguing that Defendants were not residents of the insured's household at the time of the accident. The trial court entered summary judgment for Plaintiff, concluding as a matter of law that Defendants were not entitled to coverage under the policy. The court of appeals affirmed. The Supreme Court affirmed, holding that the court of appeals did not err in determining that Defendants are not entitled to coverage under the policy and that the trial court appropriately awarded summary judgment in favor of Plaintiff. View "N.C. Farm Bureau Mutual Insurance Co., Inc. v. Martin" on Justia Law

The Supreme Court reversed the court of appeals' decision affirming the North Carolina Industrial Commission's finding that the uninsured/underinsured motorist (UIM) proceeds that Plaintiff received on behalf of her husband's estate through the settlement of a wrongful death lawsuit were subject to Defendants' subrogation lien under N.C. Gen. Stat. 97-10.2, holding that the UIM proceeds recovered from the wrongful death lawsuit may not be used to satisfy Defendants' workers' compensation lien.The decedent, Plaintiff's husband and an employee of Employer, was involved in a fatal motor vehicle accident with a third party in South Carolina. The Commission ordered Defendants to pay workers' compensation benefits to Plaintiff. Plaintiff then filed a wrongful death case seeking damages from the third party driver. The parties reached a settlement agreement that included recovery in the form of UIM proceeds. The workers' compensation insurance carrier for Employer subsequently claimed a lien on the UIM proceeds that Plaintiff recovered from the wrongful death settlement. The Commission ordered the distribution of Plaintiff's entire recovery from the South Carolina wrongful death settlement, concluding that Defendants were entitled to subrogation under section 97-10.2. The Supreme Court reversed, holding that Defendants may not satisfy their workers' compensation lien by collecting from Plaintiff's recovery of UIM proceeds in her South Carolina wrongful death settlement. View "Walker v. K&W Cafeterias" on Justia Law