{ "id": 11917763, "name": "NATIONWIDE MUTUAL INSURANCE COMPANY, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant", "name_abbreviation": "Nationwide Mutual Insurance v. State Farm Mutual Automobile Insurance", "decision_date": "1996-05-21", "docket_number": "No. 95-317", "first_page": "449", "last_page": "456", "citations": [ { "type": "official", "cite": "122 N.C. App. 449" } ], "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": "303 N.C. 387", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8573853 ], "opinion_index": -1, "case_paths": [ "/nc/303/0387-01" ] }, { "cite": "31 ALR2d 645", "category": "reporters:specialty", "reporter": "A.L.R. 2d", "weight": 2, "opinion_index": -1 }, { "cite": "400 S.E.2d 767", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1991, "pin_cites": [ { "page": "769" } ], "opinion_index": 0 }, { "cite": "101 N.C. App. 636", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8528017 ], "year": 1991, "pin_cites": [ { "page": "639" } ], "opinion_index": 0, "case_paths": [ "/nc-app/101/0636-01" ] }, { "cite": "144 S.E.2d 877", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1965, "pin_cites": [ { "page": "879" } ], "opinion_index": 0 }, { "cite": "265 N.C. 647", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8576612 ], "year": 1965, "pin_cites": [ { "page": "649" } ], "opinion_index": 0, "case_paths": [ "/nc/265/0647-01" ] }, { "cite": "384 S.E.2d 36", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1989, "pin_cites": [ { "page": "40-41" }, { "page": "41" } ], "opinion_index": 0 }, { "cite": "95 N.C. App. 663", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8522929 ], "weight": 2, "year": 1989, "pin_cites": [ { "page": "669-70" }, { "page": "672" } ], "opinion_index": 0, "case_paths": [ "/nc-app/95/0663-01" ] }, { "cite": "120 S.E.2d 430", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1961, "opinion_index": 0 }, { "cite": "255 N.C. 106", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8567411 ], "year": 1961, "opinion_index": 0, "case_paths": [ "/nc/255/0106-01" ] }, { "cite": "153 S.E. 2d 60", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1967, "opinion_index": 0 }, { "cite": "269 N.C. 558", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8564823 ], "year": 1967, "opinion_index": 0, "case_paths": [ "/nc/269/0558-01" ] }, { "cite": "345 S.E.2d 385", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1986, "opinion_index": 0 }, { "cite": "316 N.C. 730", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4695168, 4704837, 4701513, 4704337, 4704895 ], "year": 1986, "opinion_index": 0, "case_paths": [ "/nc/316/0730-05", "/nc/316/0730-02", "/nc/316/0730-03", "/nc/316/0730-01", "/nc/316/0730-04" ] }, { "cite": "340 S.E.2d 479", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1986, "pin_cites": [ { "page": "486" } ], "opinion_index": 0 }, { "cite": "79 N.C. App. 530", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8521900 ], "weight": 2, "year": 1986, "pin_cites": [ { "page": "540" }, { "page": "538" } ], "opinion_index": 0, "case_paths": [ "/nc-app/79/0530-01" ] }, { "cite": "340 S.E.2d 374", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1986, "pin_cites": [ { "page": "377" } ], "opinion_index": 0 }, { "cite": "315 N.C. 688", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4720126 ], "year": 1986, "pin_cites": [ { "page": "691" } ], "opinion_index": 0, "case_paths": [ "/nc/315/0688-01" ] }, { "cite": "284 S.E.2d 211", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1981, "pin_cites": [ { "page": "213-14", "parenthetical": "defining a \"super escape\" clause" } ], "opinion_index": 0 }, { "cite": "54 N.C. App. 551", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8523988 ], "year": 1981, "pin_cites": [ { "page": "555-57", "parenthetical": "defining a \"super escape\" clause" } ], "opinion_index": 0, "case_paths": [ "/nc-app/54/0551-01" ] }, { "cite": "176 S.E.2d 751", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 5, "year": 1970, "pin_cites": [ { "page": "755" }, { "page": "755" }, { "page": "755-56" }, { "page": "756" } ], "opinion_index": 0 }, { "cite": "277 N.C. 216", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8563799 ], "weight": 4, "year": 1970, "pin_cites": [ { "page": "220-21" }, { "page": "220" }, { "page": "221-22" }, { "page": "222" } ], "opinion_index": 0, "case_paths": [ "/nc/277/0216-01" ] }, { "cite": "152 S.E.2d 513", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1967, "pin_cites": [ { "page": "517" } ], "opinion_index": 0 }, { "cite": "269 N.C. 358", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8563705 ], "year": 1967, "pin_cites": [ { "page": "362" } ], "opinion_index": 0, "case_paths": [ "/nc/269/0358-01" ] }, { "cite": "354 S.E.2d 728", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1987, "pin_cites": [ { "page": "134" } ], "opinion_index": 0 }, { "cite": "319 N.C. 410", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4744900, 4746471, 4743498, 4747181, 4745789 ], "year": 1987, "opinion_index": 0, "case_paths": [ "/nc/319/0410-02", "/nc/319/0410-03", "/nc/319/0410-04", "/nc/319/0410-05", "/nc/319/0410-01" ] }, { "cite": "350 S.E.2d 131", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1986, "opinion_index": 0 }, { "cite": "83 N.C. App. 263", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8358404 ], "year": 1986, "opinion_index": 0, "case_paths": [ "/nc-app/83/0263-01" ] }, { "cite": "279 S.E.2d 769", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 7, "year": 1981, "pin_cites": [ { "page": "771" }, { "page": "776" }, { "page": "777" } ], "opinion_index": 0 }, { "cite": "303 N.C. 387", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8573853 ], "weight": 2, "pin_cites": [ { "page": "390" } ], "opinion_index": 0, "case_paths": [ "/nc/303/0387-01" ] } ], "analysis": { "cardinality": 655, "char_count": 15892, "ocr_confidence": 0.746, "pagerank": { "raw": 1.4492937567562114e-07, "percentile": 0.6547260091225395 }, "sha256": "c0af1148382811c1099c0231d40fe71daeb4c51074b72edb8dc0de8867419013", "simhash": "1:51415d78683d29de", "word_count": 2607 }, "last_updated": "2023-07-14T15:39:52.508825+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Judges WYNN and JOHN concur." ], "parties": [ "NATIONWIDE MUTUAL INSURANCE COMPANY, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant" ], "opinions": [ { "text": "LEWIS, Judge.\nIn this appeal, plaintiff seeks the opportunity to recover contribution from defendant for settlement payments made and defense costs incurred by plaintiff in regard to claims arising out of a traffic accident.\nOn 28 June 1986, James Elvin Browning, Jr. (\u201cJ.E. Browning\u201d) was driving a 1978 Ford Bronco owned by Brett Robbins and was pulling a trailer owned by Robert Franklin Caylor. Brett Robbins, Angie Robbins, and Teenia Warner Browning (\u201cT.W. Browning\u201d) were passengers. J.E. Browning lost control of the Bronco; all occupants were injured. The Bronco was covered by a Nationwide policy issued to Brett Robbins. The trailer was allegedly covered by a State Farm policy issued to Wanda Seagroves Caylor, the wife of Robert Franklin Caylor. Plaintiff settled the claims of Brett and Angie Robbins. On 8 June 1989, T.W. Browning filed suit against J.E. Browning and Brett Robbins (\u201ctort suit\u201d). Nationwide hired a law firm to defend J.E. Browning and Brett Robbins. On 31 January 1991, Nationwide notified State Farm that the trailer owned by Robert Caylor was involved in the accident. The tort suit came on for trial for the first week of May 1991 and was settled by Nationwide on 2 May 1991. On 11 December 1991, State Farm denied coverage.\nPlaintiff filed this action on 3 December 1993 seeking contribution from defendant for settlement payments made and defense costs incurred in regard to the suit filed by T.W. Browning. On 14 February 1994, defendant answered and moved to dismiss the claim. On 27 September 1994, plaintiff moved for summary judgment. On 14 December 1994, Judge Henry W. Hight, Jr. denied plaintiffs motion for summary judgment and granted defendant\u2019s motion to dismiss under N.C.R. Civ. P. 12(b)(6). Plaintiff appeals.\nPlaintiff assigns error to the trial court\u2019s order dismissing its complaint.\nPlaintiff argues that it is entitled to contribution because defendant breached its duty to defend J.E. Browning and Brett Robbins. Defendant asserts that it was relieved of any alleged duty it had to defend by plaintiff\u2019s delay in giving notice of the accident.\nRelying on Great American Insurance Company v. Tate Construction Company (\u201cTate\u201d), 303 N.C. 387, 279 S.E.2d 769 (1981), plaintiff contends that it acted in good faith and that defendant was not prejudiced by the delay in notice. Defendant contends that Tate does not apply, and even, if it does, that it has been prejudiced by the delay in notice.\nIn Tate, our Supreme Court, overruling previous caselaw, held that an unexcused delay by an insured in giving notice of an accident to its insurer does not relieve the insurer of the duty to defend and indemnify unless the delay materially prejudices the insurer\u2019s ability to investigate and defend. Tate, 303 N.C. at 390, 279 S.E.2d at 771. Relying on Stonewall Insurance Co. v. Fortress Reinsurers Managers, 83 N.C. App. 263, 350 S.E.2d 131 (1986), disc. review denied, 319 N.C. 410, 354 S.E.2d 728 (1987), defendant argues that Tate does not apply to this dispute because it is between two insurance companies. We disagree. Stonewall held that Tate did not apply to disputes between insurance companies over contracts of reinsurance because these contracts are negotiated at arm\u2019s length between insurance carriers who stand on equal footing. Id. at 269, 354 S.E.2d at 134. The contract at issue here was formed between the defendant and its insured. It was not negotiated at arm\u2019s length between two insurance companies as are contracts of reinsurance. We hold that Tate applies.\nUnder Tate, we cannot now determine whether defendant was relieved of its alleged duty to defend due to lack of timely notice. When an insurer claims notice was untimely, the insured must prove that notice was given as soon as practicable, and if it was not, that he or she acted in good faith. Tate, 303 at 399, 279 S.E.2d at 776. If good faith is shown, the burden then shifts to the insurer to prove that its ability to investigate and defend was materially prejudiced by the delay. Id. The trier of fact must make findings as to whether notice was given as soon as practicable, and if it was not, as to whether the insured, or here plaintiff, acted in good faith. See id. If plaintiff did act in good faith, the trier of fact must then determine whether State Farm was materially prejudiced by the delay. See id. Dismissal of plaintiffs claim for lack of prompt notice was not proper absent findings and conclusions on these issues. See id. at 400, 279 S.E.2d at 777.\nDefendant contends that dismissal was proper because neither Brett Robbins nor J.E. Browning are covered by its policy. Plaintiff asserts that both are covered persons under defendant\u2019s policy. We have reviewed the complaint filed in the tort suit, the pleadings filed in this suit, and the provisions of defendant\u2019s policy. These are sufficient to permit plaintiff to proceed with its proof of coverage. Dismissal of plaintiff\u2019s claim, if premised on this coverage issue, was premature.\nDefendant further asserts that dismissal by the trial court was proper because plaintiff has not stated a viable claim. Plaintiff contends that it is entitled to recover, either in contribution under its own name or through subrogation rights it has through its insureds, defendant\u2019s share of the defense costs (including attorney\u2019s fees) incurred and settlement payments made in the defense of J.E. Browning and Brett Robbins. We conclude that plaintiff has not stated a claim for subrogation but has stated a claim for contribution.\nWe first note that plaintiff, in its complaint, does not seek relief under a theory of subrogation but simply asserts that it is entitled to contribution from defendant. Furthermore, plaintiff\u2019s complaint and the policy it issued to Brett Robbins fail to show that plaintiff is entitled to sue as a subrogee of its insureds. An insurer who has a duty to defend its insured may not recover its defense costs, under a theory of equitable subrogation, from another insurer who also has a duty to defend the insured. See Fireman\u2019s Fund Ins. Co. v. North Carolina Farm Bureau Mut. Ins. Co., 269 N.C. 358, 362, 152 S.E.2d 513, 517 (1967) QFireman\u2019s Fund\u201d). In contrast, an insurer may recover under subrogation theory if the insurer defends an insured with the good faith belief that he has an interest to protect although the insurer in fact has no duty to defend and no liability. See Jamestown Mut. Ins. Co. v. Nationwide Mut. Ins. Co., 277 N.C. 216, 220-21, 176 S.E.2d 751, 755 (1970) (\u201cJamestown\u2019\u2019^. The insurer who sought recovery by sub-rogation in Jamestown had no liability due to a \u201csuper escape\u201d clause in its policy. See Jamestown, 277 N.C. at 220, 176 S.E.2d at 755; see also Horace Mann Ins. Co. v. Continental Casualty Co., 54 N.C. App. 551, 555-57, 284 S.E.2d 211, 213-14 (1981) (defining a \u201csuper escape\u201d clause). Since plaintiffs policy does not have a \u201csuper escape\u201d clause, Jamestown does not apply.\nIn its complaint, plaintiff admits that the policy it issued to Brett Robbins provided liability coverage for Robbins and J.E. Browning. Accordingly, plaintiff had a duty to defend. Cf. Waste Management of Carolinas, Inc. v. Peerless Ins. Co., 315 N.C. 688, 691, 340 S.E.2d 374, 377 (1986). Given, this duty, as in Fireman\u2019s Fund, plaintiff may not recover any portion of its defense costs or settlement payments made under subrogation theory.\nHowever, plaintiff may proceed by way of contribution. The policy defendant issued to Wanda Caylor included an \u201cother insurance\u201d clause which provides the following, in pertinent part:\nIf there is other applicable liability insurance we will pay only our share of the loss. Our share is the proportion that our limit of liability bears to the total of all applicable limits ....\nPlaintiff has stated only a claim for contribution to recover defendant\u2019s share of defense costs incurred and settlement payments made to settle the tort suit. See Ames v. Continental Casualty Co., 79 N.C. App. 530, 540, 340 S.E.2d 479, 486, disc. review denied, 316 N.C. 730, 345 S.E.2d 385 (1986).\nDefendant asserts that plaintiff is not entitled to contribution in that plaintiff was a mere volunteer in defending J.E. Browning and Brett Robbins and making the settlement payments. When suing as a subrogee, a mere volunteer may not recover defense costs and settlement payments. See Jamestown, 277 N.C. at 221-22, 176 S.E.2d at 755-56. It would be illogical not to apply the same rule to claims for contribution between insurers. However, we need not decide if a mere volunteer may recover in a claim for contribution, because plaintiff was not a mere volunteer. In defending J.E. Browning and Brett Robbins and settling the claims, plaintiff was protecting a \u201creal or supposed right or interest\u201d of its own. See id.\nDefendant asserts that plaintiff\u2019s claim is barred by the \u201cno legal action\u201d provision of its policy. This provision declares:\nLEGAL ACTION AGAINST US\nNo legal action may be brought against us until there has been full compliance with all the terms of this policy. In addition, under Part A, no legal action may be brought against us until:\n1. We agree in writing that the covered person has an obligation to pay; or\n2. The amount of that obligation has been finally determined by judgment after trial.\nProvisions of this type generally are enforceable. E.g. Fleming v. Insurance Co., 269 N.C. 558, 153 S.E. 2d 60 (1967). However, an insurer who unjustifiably refuses to defend an insured breaches the insurance contract and waives any provisions that define the insured\u2019s duties and obligations. Ames, 79 N.C. App. at 538, 340 S.E.2d at 485 (citing Nixon v. Ins. Co., 255 N.C. 106, 120 S.E.2d 430 (1961)). If the trial court finds that defendant had a duty to defend and breached that duty, the \u201cno legal action\u201d provision is ineffective. Accordingly, the \u201cno legal action\u201d provision of defendant\u2019s policy does not support the trial court\u2019s dismissal of plaintiff\u2019s claim at this stage of the proceedings.\nDefendant also contends that plaintiff\u2019s claim is barred by the applicable statute of limitations. We disagree. An insurer who sues another insurer under a theory of equitable subrogation to recover settlement payments and defense costs is barred from recovering payments made and expenses incurred more than three years before suit was filed. See Jamestown, 277 N.C. at 222, 176 S.E.2d at 756; see also Duke Univ. v. St. Paul Mercury Ins. Co., 95 N.C. App. 663, 669-70, 384 S.E.2d 36, 40-41 (1989). Although we have held that plaintiff has not stated a claim under subrogation theory, we hold that its claim for contribution is sufficiently analogous to a claim for subro-gation under Jamestown to warrant application of the three year statute of limitations set out in N.C. Gen. Stat. section 1-52(1). We disagree with defendant\u2019s assertion that the one year statute of limitations under N.C. Gen. Stat. section IB-3 bars plaintiff\u2019s claim. G.S. section IB-3 applies to actions for contribution among joint tortfea-sors. Wise v. Vincent, 265 N.C. 647, 649, 144 S.E.2d 877, 879 (1965). We hold that it does not apply to claims between insurance companies who both provide coverage to the same tortfeasor(s).\nGiven the three-year statute of limitations affecting contracts under G.S. section 1-52(1), an insured has three years from the date each legal expense is incurred to bring suit against the insurer for its refusal to defend the insureds. See Duke Univ., 95 N.C. App. at 672, 384 S.E.2d at 41. In like manner, if defendant breached a duty to defend, plaintiff is not barred from seeking contribution for payments made and expenses incurred on or after the date of breach.\nPlaintiff also assigns error to the trial court\u2019s denial of its motion for summary judgment. Generally, an order denying summary judgment is interlocutory, does not affect a substantial right, and is not immediately appealable. Herndon v. Barrett, 101 N.C. App. 636, 639, 400 S.E.2d 767, 769 (1991). This assignment of error is overruled.\nThe order dismissing plaintiffs claim for contribution against defendant is reversed.\nReversed and remanded.\nJudges WYNN and JOHN concur.", "type": "majority", "author": "LEWIS, Judge." } ], "attorneys": [ "Morgan & Reeves, by Robert Morgan and Robert R. Gardner, for plaintiff-appellant.", "Law Offices of Douglas F. DeBank, by Douglas F. DeBank and John T. Honeycutt, for defendant-appellee." ], "corrections": "", "head_matter": "NATIONWIDE MUTUAL INSURANCE COMPANY, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant\nNo. 95-317\n(Filed 21 May 1996)\n1. Insurance \u00a7 652 (NCI4th)\u2014 timely notice of accident\u2014 absence of findings and conclusions \u2014 dismissal of claim error\nPlaintiff automobile insurer\u2019s claim for contribution against defendant trailer insurer was improperly dismissed for lack of prompt notice of the accident absent findings and conclusions as to whether notice of the accident was given as soon as practicable; if it was not, whether plaintiff acted in good faith; and whether defendant was materially prejudiced by the delay.\nAm Jur 2d, Automobile Insurance \u00a7\u00a7 373 et seq.\nFailure to give notice, or other lack of co-operation by insured, as defense to action against compulsory liability insurer by injured member of the public. 31 ALR2d 645.\n2. Insurance \u00a7 652 (NCI4th)\u2014 insured\u2019s delay in giving notice of accident \u2014 circumstances under which insurer relieved of duty to defend\nThe rale of Great American Ins. Co. v. Tate Construction Co., 303 N.C. 387, that an unexcused delay by an insured in giving notice of an accident to its insurer does not relieve the insurer of the duty to defend and indemnify unless the delay materially prejudiced the insurer\u2019s ability to investigate and defend, though not applicable to disputes between insurance companies over contracts of reinsurance, was nevertheless applicable to this claim for contribution by plaintiff automobile insurer against defendant trailer insurer, since the contract at issue in this case was formed between defendant and its insured, and it was therefore not negotiated at arm\u2019s length between two insurance companies as are contracts of reinsurance.\nAm Jur 2d, Automobile Insurance \u00a7\u00a7 373 et seq.\nFailure to give notice, or other lack of co-operation by insured, as defense to action against compulsory liability insurer by injured member of the public. 31 ALR2d 645.\n3. Insurance \u00a7 692 (NCI4th)\u2014 costs of defense and settlement \u2014 claim for contribution stated \u2014 no claim for subrogation\nPlaintiff automobile insurer stated a viable claim for contribution against defendant insurer of the trailer the automobile was towing at the time of an accident for defendant\u2019s share of the defense costs (including attorney\u2019s fees) incurred and settlement payments made in defense of the driver and the owner of the vehicle involved in the accident, since plaintiff\u2019s complaint did not seek relief under a theory of subrogation; plaintiff\u2019s complaint and its policy failed to show that plaintiff was entitled to sue as a subrogee of its insureds; an insurer who has a duty to defend may not recover its defense costs, under a theory of equitable subro-gation, from another insurer who also has a duty to defend; plaintiff was not a mere volunteer in defending and settling the claims and therefore barred from contribution under that theory; the \u201cno legal action\u201d provision of defendant\u2019s policy did not support the trial court\u2019s dismissal of plaintiffs claim, as that provision would be reflective if the trial court found that defendant had a duty to defend and breached that duty; and the three-year statute of limitations of N.C.G.S. \u00a7 1-52(1) applied rather than the one-year statute of N.C.G.S. \u00a7 IB-3, so that plaintiff\u2019s action was not barred by the statute of limitations.\nAm Jur 2d, Automobile Insurance \u00a7\u00a7 432 et seq.\nAppeal by plaintiff from orders entered 14 December 1994 by Judge Henry W. Hight, Jr. in Wake County Superior Court. Heard in the Court of Appeals 7 December 1995.\nMorgan & Reeves, by Robert Morgan and Robert R. Gardner, for plaintiff-appellant.\nLaw Offices of Douglas F. DeBank, by Douglas F. DeBank and John T. Honeycutt, for defendant-appellee." }, "file_name": "0449-01", "first_page_order": 485, "last_page_order": 492 }