{ "id": 8524933, "name": "EMPIRE OF CAROLINA, INC., Plaintiff v. CONTINENTAL CASUALTY COMPANY, Defendant", "name_abbreviation": "Empire of Carolina, Inc. v. Continental Casualty Co.", "decision_date": "1992-03-17", "docket_number": "No. 917SC410", "first_page": "675", "last_page": "680", "citations": [ { "type": "official", "cite": "105 N.C. App. 675" } ], "court": { "name_abbreviation": "N.C. Ct. App.", "id": 14983, "name": "North Carolina Court of Appeals" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "295 S.E.2d 436", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1982, "pin_cites": [ { "page": "443" } ], "opinion_index": 0 }, { "cite": "306 N.C. 618", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8573268 ], "year": 1982, "pin_cites": [ { "page": "628" } ], "opinion_index": 0, "case_paths": [ "/nc/306/0618-01" ] }, { "cite": "199 A.2d 918", "category": "reporters:state_regional", "reporter": "A.2d", "weight": 4, "year": 1964, "pin_cites": [ { "page": "921" }, { "page": "921" } ], "opinion_index": 0 }, { "cite": "409 F.2d 1387", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 2200056 ], "year": 1969, "pin_cites": [ { "page": "1391-92" } ], "opinion_index": 0, "case_paths": [ "/f2d/409/1387-01" ] }, { "cite": "388 S.E.2d 557", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1990, "pin_cites": [ { "page": "563" } ], "opinion_index": 0 }, { "cite": "326 N.C. 133", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 5309422 ], "year": 1990, "pin_cites": [ { "page": "142" } ], "opinion_index": 0, "case_paths": [ "/nc/326/0133-01" ] }, { "cite": "172 S.E.2d 518", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1970, "pin_cites": [ { "page": "522" } ], "opinion_index": 0 }, { "cite": "276 N.C. 348", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8561396 ], "year": 1970, "pin_cites": [ { "page": "354" } ], "opinion_index": 0, "case_paths": [ "/nc/276/0348-01" ] }, { "cite": "84 S.E.2d 337", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1954, "pin_cites": [ { "page": "340", "parenthetical": "fidelity bond \"subject to rules of construction applicable to insurance policies generally\"" } ], "opinion_index": 0 }, { "cite": "241 N.C. 109", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8602955 ], "year": 1954, "pin_cites": [ { "page": "113", "parenthetical": "fidelity bond \"subject to rules of construction applicable to insurance policies generally\"" } ], "opinion_index": 0, "case_paths": [ "/nc/241/0109-01" ] }, { "cite": "403 S.E.2d 571", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1991, "pin_cites": [ { "page": "572", "parenthetical": "citation omitted" } ], "opinion_index": 0 }, { "cite": "102 N.C. App. 788", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8525787 ], "year": 1991, "pin_cites": [ { "page": "789", "parenthetical": "citation omitted" } ], "opinion_index": 0, "case_paths": [ "/nc-app/102/0788-01" ] }, { "cite": "348 S.E.2d 794", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1986, "pin_cites": [ { "page": "796" } ], "opinion_index": 0 }, { "cite": "318 N.C. 378", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4736888 ], "year": 1986, "pin_cites": [ { "page": "380" } ], "opinion_index": 0, "case_paths": [ "/nc/318/0378-01" ] }, { "cite": "657 F. Supp. 1122", "category": "reporters:federal", "reporter": "F. Supp.", "year": 1987, "pin_cites": [ { "page": "1134" } ], "opinion_index": 0 } ], "analysis": { "cardinality": 536, "char_count": 10993, "ocr_confidence": 0.767, "pagerank": { "raw": 4.03580807328026e-08, "percentile": 0.2055444159099623 }, "sha256": "7e16deaca0baaba009f3d188ba630b09bb2e78b7374c814906a96b16aeea1381", "simhash": "1:dc62437e8d5da5e7", "word_count": 1724 }, "last_updated": "2023-07-14T19:24:40.355340+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Judges JOHNSON and Cozort concur." ], "parties": [ "EMPIRE OF CAROLINA, INC., Plaintiff v. CONTINENTAL CASUALTY COMPANY, Defendant" ], "opinions": [ { "text": "GREENE, Judge.\nPlaintiff appeals from an order entered 25 January 1991 granting the defendant\u2019s motion for summary judgment.\nViewed in the light most favorable to the plaintiff, the evidence produced at the summary judgment hearing tends to show the following relevant facts: On 11 April 1979, the plaintiff, a public corporation engaged in manufacturing and marketing children\u2019s toys, purchased and the defendant issued a \u201cComprehensive Dishonesty, Disappearance, and Destruction Policy\u201d of insurance. Under this fidelity insurance policy, the defendant agreed to pay to the plaintiff for \u201cLoss of Money, Securities and other property which the Insured shall sustain\u201d through the fraudulent or dishonest act or acts of an employee. The limit of the defendant\u2019s liability under this policy was $500,000 per officer. From 1977 through 1982, the former president of the plaintiff misappropriated $502,201.99 from the plaintiff. The former president stole $278,759.51 of the total amount during the policy periods.\nOn 6 August 1982, the plaintiff notified the defendant that it had sustained a loss of money resulting from fraudulent or dishonest acts of an employee. The defendant granted the plaintiff an extension of time within which to submit a Proof of Loss, and the plaintiff submitted the required document on 1 April 1983. In the Proof of Loss, the plaintiff explained that on 31 August 1982 the Securities and Exchange Commission (SEC) had issued a Formal Order of Investigation in connection with its former president\u2019s dishonest acts. In 1984, the SEC sued the plaintiff\u2019s former president for his alleged violation of federal securities laws in connection with his misappropriation of money from the plaintiff, and on 8 April 1987, U.S. District Judge Pierre N. Leval granted the SEC\u2019s motion for summary judgment against the former president and ordered him to \u201cdisgorge\u201d to the SEC the $502,201.99 he had misappropriated from the plaintiff. SEC v. Benson, 657 F. Supp. 1122, 1134 (S.D.N.Y. 1987).\nOn 9 November 1987, the plaintiff requested that the defendant \u201crecognize coverage\u201d for its $278,759.51 loss. Because the defendant believed that the plaintiff\u2019s Proofs of Loss were inadequate, the defendant refused to recognize the claim. On 23 February 1988, the plaintiff again demanded that the defendant recognize coverage for its loss. On 22 September 1988, however, the former president complied with the district court\u2019s order, and thereafter, the SEC returned the money to the plaintiff. On 1 March 1989, the plaintiff informed the defendant that it had received the $502,201.99 previously stolen by its former president. Furthermore, the plaintiff informed the defendant that under the terms of the fidelity insurance policy it was entitled to interest on the $278,759.51 stolen by its former president during the policy periods. Computed from 1 January 1981 until 22 September 1988, the plaintiff determined that the lost interest amounted to more than $560,000, and because that amount exceeded the policy limits, the plaintiff demanded that the defendant pay to the plaintiff the $500,000 limit of liability under the policy.\nThe defendant did not comply with the plaintiff\u2019s demand, and on 29 December 1989, the plaintiff filed an action against the defendant. The defendant answered the complaint denying that \u201c[t]he loss of potential income or interest is a loss covered under the terms of the policy.\u201d The defendant also raised various affirmative defenses to the plaintiff\u2019s action including the statute of limitations, doctrine of laches, and failure to mitigate damages. On 19 November 1990 and 30 November 1990, the plaintiff and the defendant, respectively, filed motions for summary judgment. The plaintiff also filed on 19 November 1990 a motion to compel discovery of material relating to the defendant\u2019s affirmative defenses. On 25 January 1991, the trial court granted the defendant\u2019s motion, denied the plaintiff\u2019s motion, and dismissed the plaintiff\u2019s action.\nThe dispositive issue is whether the language of the fidelity insurance policy requires the defendant to pay the lost interest on the $278,759.51 stolen by the plaintiff\u2019s former president.\n\u201c[A]n insurance policy is a contract and its provisions govern the rights and duties of the parties thereto.\u201d Fidelity Bankers Life Ins. Co. v. Dortch, 318 N.C. 378, 380, 348 S.E.2d 794, 796 (1986). \u201cOur courts have a \u2018duty to construe and enforce insurance policies as written, without rewriting the contract or disregarding the express languag\u00e9 used. . . . The duty is a solemn one, for it seeks to preserve the fundamental right of freedom of contract.\u2019 \u201d Kruger v. State Farm Mut. Auto. Ins. Co., 102 N.C. App. 788, 789, 403 S.E.2d 571, 572 (1991) (citation omitted). The fidelity insurance policy provided that the defendant was to pay to the plaintiff for \u201cLoss of Money, Securities and other property which the Insured shall sustain\u201d through the fraudulent or dishonest act or acts of an employee. This is the language this Court must construe. See Thomas & Howard Co. v. American Mut. Liab. Ins. Co., 241 N.C. 109, 113, 84 S.E.2d 337, 340 (1954) (fidelity bond \u201csubject to rules of construction applicable to insurance policies generally\u201d). Because the defendant chose this language, we must resolve any ambiguity in the language in favor of the plaintiff and against the defendant. Wachovia Bank & Trust Co. v. Westchester Fire Ins. Co., 276 N.C. 348, 354, 172 S.E.2d 518, 522 (1970).\nThe plaintiff argues that the trial court erroneously granted the defendant\u2019s motion for summary judgment because the phrase \u201closs of money\u201d as used in the policy covers not only the principal amount stolen but also the lost interest on the $278,759.51 until the plaintiff\u2019s former president returned it. This argument assumes, however, that the term \u201cmoney\u201d as used in the policy is ambiguous. It is not. When an insurance policy defines a term, the definition in the policy controls the meaning of the term. C.D. Spangler Constr. Co. v. Industrial Crankshaft & Eng\u2019g Co., 326 N.C. 133, 142, 388 S.E.2d 557, 563 (1990). The policy defines \u201cmoney\u201d as \u201ccurrency, coins, bank notes and bullion, and travelers checks, register checks and money orders held for sale to the public.\u201d Interest on stolen currency, coins, etc. is not included in the definition of \u201cmoney.\u201d Accordingly, the defendant\u2019s contractual obligation under this unambiguous fidelity insurance policy was limited to compensating the plaintiff for the principal amount stolen by the plaintiffs former president.\nContrary to the plaintiff\u2019s argument, the policy in question is distinguishable from the policies in American Ins. Co. v. First Nat\u2019l Bank, 409 F.2d 1387, 1391-92 (8th Cir. 1969) and Social Sec. Admin, v. Employers Mut. Liab. Ins. Co., 199 A.2d 918, 921 (Md. 1964). In American, the defendant had issued a banker\u2019s blanket bond which indemnified the plaintiff from \u201cany loss\u201d the plaintiff sustained as a result of loans made by the plaintiff on the basis of forged signatures, and the plaintiff, a bank, made such loans which proved to be uncollectable. Id. at 1388-89. The court held that although the policy did not make any provision for payment of interest, the policy provisions indemnifying the plaintiff from \u201cany loss\u201d were \u201csufficiently broad\u201d to cover loss of use of money. Id. at 1391-92. In the present case, however, the policy language is narrow in that it does not cover \u201cany loss\u201d but only the \u201closs of money.\u201d This narrow policy language is also distinguishable from the policy language in Social Sec., 199 A.2d at 921. The policy in that case indemnified the plaintiff against \u201c \u2018direct loss of, or damage to\u2019 money resulting from dishonesty of an employee.\u201d Id. The court held that interest on money embezzled by an employee was a \u201c \u2018direct loss of, or damage to\u2019 \u201d the money embezzled and was therefore covered by the policy. Id. In the present case, however, the policy specifically provides that the term \u201closs\u201d does not include \u201cdamage\u201d to money. Accordingly, this Court may not construe \u201closs of money\u201d as meaning \u201cdamage to the money,\u201d i.e., interest, stolen by the plaintiff\u2019s former president.\nFurthermore, we recognize that ordinarily a trial court may not enter summary judgment until discovery is complete, Moore v. Crumpton, 306 N.C. 618, 628, 295 S.E.2d 436, 443 (1982), and that in this case, the trial court entered summary judgment for the defendant before the plaintiff had completed its discovery. The incomplete discovery, however, was related to the defendant\u2019s affirmative defenses, not to whether the fidelity insurance policy provided coverage for the lost interest. Therefore, contrary to the plaintiff\u2019s argument, any error in the trial court\u2019s entry of summary judgment was harmless because the incomplete discovery related to the defendant\u2019s affirmative defenses and therefore would not have created any genuine issue of material fact regarding whether the policy provided coverage for the lost interest.\nBecause the fidelity insurance policy does not provide coverage for the lost interest, the trial court\u2019s order of summary judgment for the defendant is\nAffirmed.\nJudges JOHNSON and Cozort concur.", "type": "majority", "author": "GREENE, Judge." } ], "attorneys": [ "Womble Carlyle Sandridge & Rice, by Thomas L. Nesbit, for plaintiff-appellant.", "Petree Stockton & Robinson, by James P. Cain and Katherine E. Flanagan, for defendant-appellee." ], "corrections": "", "head_matter": "EMPIRE OF CAROLINA, INC., Plaintiff v. CONTINENTAL CASUALTY COMPANY, Defendant\nNo. 917SC410\n(Filed 17 March 1992)\n1. Insurance \u00a7 6.1 (NCI3d)\u2014 fidelity insurance \u2014 payment of interest on money stolen \u2014 not required\nThe language of a fidelity insurance policy did not require defendant to pay the lost interest on $278,759.51 stolen by plaintiff\u2019s former president where defendant agreed to pay, under this policy, for loss of money, securities and other property sustained through the fraudulent or dishonest act or acts of an employee; plaintiff\u2019s former president misappropriated $502,201.99 from plaintiff, $278,759.51 during the policy periods; the SEC ordered the former president to disgorge the $502,201.99 and returned it to plaintiff; and plaintiff demanded interest on the $278,759.51 under the fidelity insurance policy. The policy specifically provides that the term \u201closs\u201d does not include \u201cdamage\u201d to money.\nAm Jur 2d, Fidelity Bonds and Insurance \u00a7 76.\n2. Rules of Civil Procedure \u00a7 56.1 (NCI3d)\u2014 summary judgment \u2014 incomplete discovery \u2014unrelated issue\nThere was no prejudicial error in the granting of summary judgment on the issue of whether an insurance policy provided coverage while discovery was incomplete because the incomplete discovery related to defendant\u2019s affirmative defenses and would not have created any genuine issue of material fact regarding whether the policy provided coverage.\nAm Jur 2d, Summary Judgment \u00a7 27.\nAppeal by plaintiff from order entered 25 January 1991 in EDGECOMBE County Superior Court by Judge Frank R. Brown. Heard in the Court of Appeals 20 February 1992.\nWomble Carlyle Sandridge & Rice, by Thomas L. Nesbit, for plaintiff-appellant.\nPetree Stockton & Robinson, by James P. Cain and Katherine E. Flanagan, for defendant-appellee." }, "file_name": "0675-01", "first_page_order": 703, "last_page_order": 708 }