{ "id": 9080776, "name": "THE COUNTRY CLUB OF JOHNSTON COUNTY, INC., Plaintiff v. UNITED STATES FIDELITY & GUARANTY COMPANY, Defendant", "name_abbreviation": "Country Club of Johnston County, Inc. v. United States Fidelity & Guaranty Co.", "decision_date": "2002-05-21", "docket_number": "No. COA01-726", "first_page": "231", "last_page": "249", "citations": [ { "type": "official", "cite": "150 N.C. App. 231" } ], "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": "448 S.E.2d 516", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1994, "opinion_index": 0 }, { "cite": "337 N.C. 689", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2552673, 2552004, 2552265, 2551980, 2552241 ], "year": 1994, "opinion_index": 0, "case_paths": [ "/nc/337/0689-04", "/nc/337/0689-01", "/nc/337/0689-05", "/nc/337/0689-02", "/nc/337/0689-03" ] }, { "cite": "446 S.E.2d 117", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1994, "pin_cites": [ { "page": "122" } ], "opinion_index": 0 }, { "cite": "115 N.C. App. 641", "category": "reporters:state", "reporter": "N.C. 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App.", "case_ids": [ 8521339 ], "year": 1993, "pin_cites": [ { "parenthetical": "insurer's act in uniformly denying certain claims without first establishing a proper basis for refusal to pay sufficient to support claim under N.C. Gen. Stat. \u00a7 75-1.1" } ], "opinion_index": 0, "case_paths": [ "/nc-app/112/0295-01" ] }, { "cite": "496 S.E.2d 1", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1998, "pin_cites": [ { "page": "6", "parenthetical": "citation omitted" }, { "page": "6" } ], "opinion_index": 0 }, { "cite": "128 N.C. App. 450", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 11655385 ], "weight": 2, "year": 1998, "pin_cites": [ { "page": "458", "parenthetical": "citation omitted" }, { "page": "458" } ], "opinion_index": 0, "case_paths": [ "/nc-app/128/0450-01" ] }, { "cite": "735 F. Supp. 1320", "category": "reporters:federal", "reporter": "F. 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App.", "opinion_index": 0 }, { "cite": "462 S.E.2d 527", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1995, "pin_cites": [ { "parenthetical": "\"USF&G /\"" } ], "opinion_index": 0 }, { "cite": "341 N.C. 656", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 793056, 793186, 793211, 793107, 793243 ], "year": 1995, "pin_cites": [ { "parenthetical": "\"USF&G /\"" } ], "opinion_index": 0, "case_paths": [ "/nc/341/0656-02", "/nc/341/0656-05", "/nc/341/0656-03", "/nc/341/0656-01", "/nc/341/0656-04" ] }, { "cite": "458 S.E.2d 734", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1995, "pin_cites": [ { "parenthetical": "\"USF&G /\"" }, { "page": "740-41" } ], "opinion_index": 0 }, { "cite": "119 N.C. App. 365", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 11915281 ], "year": 1995, "pin_cites": [ { "parenthetical": "\"USF&G /\"" } ], "opinion_index": 0, "case_paths": [ "/nc-app/119/0365-01" ] }, { "cite": "N.C. Gen. Stat. \u00a7 75-1.1", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "weight": 32, "year": 1999, "pin_cites": [ { "page": "73" } ], "opinion_index": 0 } ], "analysis": { "cardinality": 1338, "char_count": 46253, "ocr_confidence": 0.769, "pagerank": { "raw": 5.30594758658093e-07, "percentile": 0.9424611241813712 }, "sha256": "e6d45b651de5b7a7a1b0bd7d4f71046c8000a706f965c0a09e91c2c9f4b1e742", "simhash": "1:2f2813445c79b4f4", "word_count": 7691 }, "last_updated": "2023-07-14T19:52:10.836930+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Judges WALKER and BRYANT concur." ], "parties": [ "THE COUNTRY CLUB OF JOHNSTON COUNTY, INC., Plaintiff v. UNITED STATES FIDELITY & GUARANTY COMPANY, Defendant" ], "opinions": [ { "text": "HUNTER, Judge.\nDefendant-appellant Unites States Fidelity and Guaranty Company (\u201cUSF&G\u201d) appeals the entry of judgment based upon a jury verdict concluding that USF&G committed an unfair and deceptive act or practice in violation of N.C. Gen. Stat. \u00a7 75-1.1 (1999), and awarding treble damages, and orders denying its motions and awarding costs and attorney\u2019s fees. For reasons stated herein, we hold the trial court did not err in denying USF&G\u2019s motions and in concluding that USF&G\u2019s actions as found by the jury amounted to a violation of N.C. Gen. Stat. \u00a7 75-1.1.\nThis is the fourth appeal to this Court involving these parties and stemming from an incident which occurred 18 October 1991. On that date, a member of plaintiff-appellee The Country Club of Johnston County, Inc. (\u201cthe Club\u201d) consumed several alcoholic beverages at the Club following a golf tournament. While driving home, the member struck another vehicle, killing its driver and seriously injuring a passenger. On the date of the accident, the Club was insured by USF&G under a master insurance policy including commercial general liability coverage (\u201cthe policy\u201d). In May 1993, the family of the decedent instituted an action against the member and the Club in Wake County Superior Court. See Sanders, et al. v. Upton, 93 CVS 4415 (\u201cSanders\u201d). USF&G defended the Club in Sanders under a reservation of rights regarding coverage, and the case was ultimately settled.\nIn July 1993, USF&G filed a declaratory judgment action seeking a determination that the policy afforded no coverage to the Club for the damages alleged in Sanders because of a liquor liability exclusion in the policy (hereinafter \u201cExclusion C\u201d). The Club filed an answer and a counterclaim alleging USF&G negligently failed to provide an extension of its coverage despite knowledge of the Club\u2019s alcohol practices. While an appeal to this Court was pending, the Club voluntarily dismissed its counterclaim without prejudice and instituted the present action on 23 January 1995. The amended complaint alleged, among other things, claims against USF&G for bad faith and unfair and deceptive practices in violation of N.C. Gen. Stat. \u00a7 75-1.1.\nIn July 1995, this Court rendered an opinion in USF&G\u2019s declaratory judgment action. See U.S. Fidelity & Guaranty Co. v. Country Club of Johnston County, 119 N.C. App. 365, 458 S.E.2d 734, disc. review denied, 341 N.C. 656, 462 S.E.2d 527 (1995) (\u201cUSF&G /\u201d). In USF&G I, we reversed the trial court\u2019s entry of summary judgment in favor of USF&G, holding that although the policy contained a liquor liability coverage exclusion, there remained genuine issues of material fact as to whether USF&G was precluded from denying coverage under the doctrines of estoppel and waiver. Id. at 374-75, 458 S.E.2d at 740-41. On remand, the trial court granted summary judgment in favor of the Club, finding that USF&G waived its right to enforce Exclusion C as a matter of law. In June 1997, this Court affirmed that judgment, and the Supreme Court denied review, thereby establishing that the Club was entitled to coverage. See U.S. Fidelity and Guaranty Co. v. Country Club of Johnston Co., 126 N.C. App. 633, 491 S.E.2d 569 (unpublished opinion), disc. review denied, 347 N.C. 141, 492 S.E.2d 38 (1997) (\u201cUSF&G IF).\nFollowing our decision in USF&G II, in November 1997, USF&G filed a motion to dismiss the Club\u2019s complaint in the present case under N.C. Gen. Stat. \u00a7 1A-1, Rule 12(b)(1) and (6) (1999). The motion was denied, and USF&G filed an appeal with this Court, which we dismissed as interlocutory. See Country Club of Johnston County, Inc. v. U.S. Fidelity and Guar. Co., 135 N.C. App. 159, 519 S.E.2d 540 (1999), disc. review denied, 351 N.C. 352, 542 S.E.2d 207 (2000) (\u201cCountry Club I\u201d). The Club\u2019s claims proceeded to trial.\nThe evidence presented at trial tended to show that in April 1991, USF&G directed its underwriters to attach to the policies of insureds who serve alcohol an amendment further restricting coverage for liquor liability. The amendment, called CG-2150, amended Exclusion C, the policy\u2019s general liquor liability coverage exclusion, which excluded coverage for insureds \u201cin the business of\u2019 selling or furnishing alcohol. The CG-2150 amendment was intended to clarify that, as to insureds who regularly serve alcohol, the general liability coverage under their policy would not be enough to provide coverage for their alcohol practices, and that they would be required to pay an additional premium if they wished to have coverage for such practices. Under the CG-2150 amendment, the exclusion would also apply to insureds who \u201c[s]erve or furnish alcoholic beverages without a charge, if a license is required for such activity.\u201d\nIn August 1991, shortly before the accident, senior USF&G underwriter Catherine Davis reviewed the Club\u2019s underwriting report which contained details regarding its alcohol practices, including that the Club had a brown-bagging alcohol license. Davis made handwritten notes on the report indicating that because the Club had an alcohol license, the CG-2150 endorsement must be applied to its policy to inform the Club that it would be required to procure additional insurance if it desired coverage for its alcohol practices. Despite Davis\u2019 notation that CG-2150 should attach to the Club\u2019s policy due to its liquor license, the Club maintained that it was not informed by USF&G that its general policy did hot provide coverage for its alcohol activities or that it would be required to purchase additional coverage. The Club produced Davis\u2019 notes from a September 1991 telephone conversation with USF&G agent David Grady, also a member of the Club, wherein Grady informed Davis that Club members only \u201cbrown bag\u201d approximately six times per year. Thus, Davis concluded that the Club did not \u201cappear to be a large exposure,\u201d and that she was \u201cgoing to delete CG-2150.\u201d Davis later maintained that Grady had failed to inform her, and that she was unaware, that Club members could also purchase beer at the Club. Following the accident, Davis sent a letter to the Club informing it that USF&G would now be attaching the CG-2150 amendment to its policy.\nThe Club also presented evidence establishing that when the claim was made, the matter was examined by claims supervisor Douglas Funk, who determined that Exclusion C, the original liquor liability coverage exclusion, did not bar coverage. Funk testified that according to his notes dated 19 November 1991, he recommended that USF&G not send a reservation of rights letter on the basis that Exclusion C applied, and noted that the Club did not appear to be in the business of serving or furnishing alcohol. On 20 November 1991, USF&G did send a reservation of rights letter stating that USF&G believed Exclusion C might apply to bar coverage, and that the matter would be further investigated. The following day, 21 November 1991, a USF&G home office claims examiner concluded that \u201cwe are going to take the position of no coverage.\u201d\nDon Roinestad, who testified as an insurance expert in the fields of underwriting and claims handling, concluded that USF&G had failed to follow \u201cacceptable claims practices\u201d throughout the handling of the Club\u2019s claim. He testified that by failing to attach the CG-2150 amendment further restricting liquor liability coverage, Davis, and as a result USF&G, automatically accepted that there was coverage under the policy as it existed. He further testified that the sending of a reservation of rights letter in part based upon the applicability of Exclusion C was \u201ctotally inappropriate\u201d because \u201cthe claims people . .. already knew at th[at] time that Cathy Davis and the agent [David Grady] agreed to provide this coverage for the insured.\u201d Roinestad also testified that USF&G failed to properly document its claims process, observing that key conversations regarding the Club\u2019s claim were never documented and placed in its file.\nOn 15 August 2000, the jury returned a verdict in favor of the Club as to damages and proximate cause, answering the following four special interrogatories in the affirmative:\na. Did USF&G prematurely and improperly determine that it was going to deny coverage prior to conducting a meaningful investigation?\nb. Did USF&G misrepresent that it was investigating the application of Exclusion C when USF&G had determined that it was going to deny coverage?\nc. Did USF&G solicit an opinion letter from counsel after having already made a decision to deny coverage?\nd. Did USF&G unfairly or improperly send a \u201creservation of rights\u201d letter on 11/20/91 citing Exclusion C, without having an adequate or documented basis to reverse Mr. Funk\u2019s position to not reserve rights as to Exclusion C documented on 11/19/91?\nThe jury answered the remaining two interrogatories in favor of USF&G, declining to find the insurer responsible for its attorney\u2019s conduct of removing Davis\u2019 handwritten notes regarding the CG-2150 amendment from the copy of USF&G\u2019s underwriting report provided to the Club during discovery in the declaratory judgment action:\ne. Did USF&G participate in an unfair or deceptive alteration of Cathy Davis\u2019 handwritten notes on page two of the underwriting report?\nf. Did USF&G participate in an unfair or deceptive use of the underwriting report that had been altered by the deletion of Cathy Davis\u2019 handwritten notes?\nThe jury awarded the Club $90,000.00 in damages. With the Club\u2019s consent, the trial court entered a remittitur on 27 November 2000 which reduced the damage award to $43,312.53, the amount which both parties agreed was what the Club had expended in attorney\u2019s fees defending USF&G\u2019s declaratory judgment action. By this order, the trial court also denied USF&G\u2019s post-trial motions for judgment notwithstanding the verdict, or in the alternative, a new trial. By judgment entered 27 November 2000, the trial court concluded as a matter of law, based on the jury\u2019s interrogatories and the court\u2019s independent review of the evidence, that USF&G committed an unfair and deceptive act or practice in violation of N.C. Gen. Stat. \u00a7 75-1.1. The trial court trebled the damages to $129,937.59 pursuant to N.C. Gen. Stat. \u00a7 75-16 (1999). In a separate order, the trial court made extensive findings of fact with respect to costs and attorney\u2019s fees and taxed $12,530.52 in costs and $154,078.75 in attorney\u2019s fees to USF&G. USF&G appeals from the verdict and judgment, from the denial of its post-trial motions, and from the order taxing costs and attorney\u2019s fees.\nUSF&G brings forth several assignments of error on appeal, which we address within the following five issues: whether the trial court erred in failing to grant USF&G\u2019s motions to dismiss, for directed verdict, and for judgment notwithstanding the verdict or new trial because (1) the Club\u2019s complaint was barred by the rule against claim-splitting and because its claims were compulsory counterclaims in USF&G\u2019s declaratory judgment action; (2) a claim under N.C. Gen. Stat. \u00a7 75-1.1 cannot be maintained in the absence of a contractual right to coverage under the policy; (3) the Club\u2019s claim under N.C. Gen. Stat. \u00a7 75-1.1 cannot stand where the Club failed to plead and prove a claim under N.C. Gen. Stat. \u00a7 58-63-15(11) (1999); (4) the Club failed to show any misconduct or aggravated circumstances sufficient to support a claim under N.C. Gen. Stat. \u00a7 75-1.1; and (5) attorney\u2019s fees and costs were unwarranted under N.C. Gen. Stat. \u00a7 75-16.1 (1999), and were unreasonable in amount. We conclude the trial court did not err in denying any of USF&G\u2019s motions and in determining, as a matter of law, that USF&G\u2019s actions as found by the jury constituted an unfair and deceptive act or practice in violation of N.C. Gen. Stat. \u00a7 75-1.1, thereby warranting treble damages, attorney\u2019s fees, and costs.\nPreliminarily, we note that the standard of review on a motion to dismiss under Rule 12(b)(1) for lack of jurisdiction is de novo. Fuller v. Easley, 145 N.C. App. 391, 395, 553 S.E.2d 43, 46 (2001). For a motion based on Rule 12(b)(6), the standard is whether, construing the complaint liberally, \u201c \u2018the allegations of the complaint, treated as true, are sufficient to state a claim upon which relief may be granted under some legal theory.\u2019 \u201d Block v. County of Person, 141 N.C. App. 273, 277, 540 S.E.2d 415, 419 (2000) (citation omitted). Our standard of review for a ruling on motions for directed verdict and judgment notwithstanding the verdict are the same: \u201cwhether, \u2018upon examination of all the evidence in the light most favorable to the nonmoving party, and that party being given the benefit of every reasonable inference drawn therefrom, the evidence is sufficient to be submitted to the jury.\u2019 \u201d Stamm v. Salomon, 144 N.C. App. 672, 679, 551 S.E.2d 152, 157 (2001) (citation omitted), appeal dismissed and disc. review denied, 355 N.C. 216, 560 S.E.2d 139 (2002). Moreover, \u201c \u2018[t]he trial court\u2019s determination on the grant or denial of an alternative new trial is reversible only for an abuse of discretion.\u2019 \u201d In re Buck, 350 N.C. 621, 627, 516 S.E.2d 858, 862 (1999) (citation omitted).\nI.\nUSF&G first argues that the trial court erred in denying its motions both because the Club\u2019s complaint should have been barred by the rule against claim-splitting and because the Club\u2019s claims were required to be brought as compulsory counterclaims in USF&G\u2019s declaratory judgment action. We disagree with both arguments.\nFirst, USF&G argues that the Club\u2019s claims in this case should be barred by res judicata, and specifically, the rule against claim-splitting because the Club knew of the claims which it brings forth here at the time USF&G filed its declaratory judgment action. Thus, USF&G argues, the Club was required to have brought forth its claims in the declaratory judgment action because they arose out of the same factual background and transactions addressed in that action, and the claims are now barred from being litigated in this case.\n\u201c[T]he common law rule against claim-splitting is based on the principle that all damages incurred as the result of a single wrong must be recovered in one lawsuit.\u201d Bockweg v. Anderson, 333 N.C. 486, 492, 428 S.E.2d 157, 161 (1993). \u201cWhere the second action between two parties is upon the same claim, the prior judgment serves as a bar to the relitigation of all matters that were or should have been adjudicated in the prior action.\u201d Id. However, if the second action involves a different claim, \u201cthe prior judgment serves as a bar only as to issues actually litigated and determined in the original action.\u201d Id. \u201cWhile it is true that a \u2018judgment is conclusive as to all issues raised by the pleadings,\u2019 the judgment is not conclusive as to issues not raised by the pleadings which serve as the basis for the judgment.\u201d Id. at 492, 428 S.E.2d at 161-62 (citation omitted).\nThus, in Bockweg, our Supreme Court determined that where the negligence claims at issue were previously dismissed voluntarily from a prior federal court action and were not the basis of the prior judgment, the prior judgment could not operate to bar subsequent prosecution of the claims in state court. Id. at 493, 428 S.E.2d at 162. The defendants in Bockweg advocated application of the \u201ctransactional approach\u201d to claim-splitting wherein \u201call issues arising out of \u2018a transaction or series of transactions\u2019 must be tried together as one claim.\u201d Id. The Supreme Court declined to adopt this approach and concluded that the subsequent action, which involved a claim arising out of a separate instance of negligence, could not be barred by the prior federal court judgment \u201csince the pleadings upon which the judgment in the prior action was based did not raise the claim now presented.\u201d Id. at 496, 428 S.E.2d at 164.\nWe have previously observed that the courts of this State have not adopted the transactional approach to claim-splitting. See Northwestern Financial Group v. County of Gaston, 110 N.C. App. 531, 537, 430 S.E.2d 689, 693, disc. review denied, 334 N.C. 621, 435 S.E.2d 337 (1993). The defendants in Northwestern attempted to distinguish Bockweg (which involved two separate instances of negligence) from their case, which involved two claims based upon the same wrongful act of denying a permit. Id. at 538, 430 S.E.2d at 694. The defendants argued that the second action did not raise anything new, but instead simply changed the legal argument and the remedy sought. Id. Nevertheless, this Court held that the second action was permissible, stating:\nThough it is true that both Northwestern\u2019s suits arise out of the same set of facts and circumstances, Northwestern alleges that its claims for damages could not have been known until after it was granted the mandatory injunction. We believe that this is a pivotal distinction. It is well established that all of a party\u2019s damages resulting from a single wrong must be recovered in a single action. . . . However, for this rule to apply, logic and common sense require that both remedies must have been available at the time the first action was commenced.\nId. at 538-39, 430 S.E.2d at 694.\nIn the present case, aside from the fact that the Club voluntarily dismissed its sole counterclaim prior to its being litigated, we agree with the Club\u2019s position that the instant action involves different claims than those involved in the declaratory judgment action. The declaratory judgment action involved issues of coverage such as waiver and estoppel, and not the issues presented in this suit, namely, bad faith and unfair and deceptive practices. To the extent the Club\u2019s counterclaim in the declaratory judgment action, which simply alleged USF&G\u2019s negligence in failing to provide adequate coverage for the Club\u2019s alcohol practices, addressed USF&G\u2019s actions, it did not assert a claim for unfair and deceptive practices, and it did not address USF&G\u2019s handling of the claim after the accident, which was the basis for the judgment in the instant case. Indeed, the amended complaint in the present case contains factual allegations far exceeding those in the declaratory judgment action, including several allegations regarding USF&G\u2019s handling of the Club\u2019s claim, which were neither pled nor at issue in the declaratory judgment action.\nMoreover, the Club maintains that it did not assert its claims for bad faith and unfair and deceptive practices in the declaratory judgment action because at that time it was not and could not have been fully aware of the facts which now form the basis of its claims, nor the extent of its damages. The record supports the Club\u2019s assertion that it began to discover the facts surrounding USF&G\u2019s handling of its policy and its claim as discovery proceeded in the declaratory judgment action. Thus, as we observed in Northwestern, logic and common sense require the conclusion that the Club cannot be required to have brought a claim of which it could not have reasonably known at the time of the first action. Even USF&G acknowledges in its brief that a party is required to try his whole cause of action at one time only when the party has \u201cfull knowledge of his damages as well as the facts giving rise to his cause of action.\u201d Although USF&G argues that the Club knew at the time it filed its answer and counterclaim of all facts necessary to bring its entire cause of action against USF&G, including its claim for unfair and deceptive practices, USF&G has failed to persuasively establish that such was the case. Contrary to USF&G\u2019s assertion, the Club did not plead claims relating to USF&G\u2019s failure to investigate in its answer to the declaratory judgment action.\nWe conclude that the Club\u2019s complaint in the present case was not barred by res judicata because it did not bring forth claims which had already been litigated. Rather, it brought forth entirely different claims, based in part upon USF&G\u2019s actions in handling the Club\u2019s claim, which were not at issue in the declaratory judgment action and which were not fully known to the Club at that time. For the same reasons, we overrule USF&G\u2019s related argument that the present claims were required to have been brought as compulsory counterclaims in the declaratory judgment action.\nUnder N C. Gen. Stat. \u00a7 1A-\u00cd, Rule 13(a) (1999), a party is required to plead as a counterclaim\nany claim which at the time of serving the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party\u2019s claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction.\nUnder this rule, a counterclaim is compulsory only \u201cwhen it is in existence at the time of the serving of the pleading.\u201d U.S. Fire Ins. Co. v. Southeast Airmotive Corp., 102 N.C. App. 470, 472, 402 S.E.2d 466, 468, disc. review denied, 329 N.C. 505, 407 S.E.2d 553 (1991).\nThus, where a claim is not mature at the time of the filing of the action, failure to bring it as a counterclaim does not serve as a bar to subsequent litigation on that claim. Stines v. Satterwhite, 58 N.C. App. 608, 614, 294 S.E.2d 324, 328 (1982). Moreover, even where the claim matures after the pleadings have been filed but during the pen-dency of the action, the pleader is not required to supplement the pleadings with a compulsory counterclaim. Id. Therefore, in Stines, we held that where the complaint in the subsequent action averred that material facts were hot known at the time of the preceding action, the claims based thereon could not have been compulsory counterclaims, and the plaintiffs were not barred from bringing the subsequent action. Id. We observed that the plaintiffs \u201ccannot be expected to plead that which they did not know.\u201d Id. Likewise, in Driggers v. Commercial Credit Corp., 31 N.C. App. 561, 230 S.E.2d 201 (1976), we held that:\nSince there is no showing that [plaintiff] knew or by the exercise of reasonable diligence should have known of his alleged claim for fraud at the time he served answer in the prior action, his claim falls within the exception to Rule 13(a) and constitutes a permissive, not compulsory, counterclaim. His failure to assert his claim in the prior action is therefore not a bar to his present action.\nId. at 565, 230 S.E.2d at 203.\nIn this case, USF&G has failed to establish that the claims presented here are compulsory counterclaims because, as previously discussed, it has failed to establish that the Club knew or reasonably should have known of all material facts necessary to assert all claims. To the contrary, the Club asserts, and the record supports, that the true extent of USF&G\u2019s actions and the facts which constitute the basis of the Club\u2019s claims in this case were not fully known to the Club at the time the declaratory judgment action was filed, but rather, became clear to the Club throughout the pendency of that action. None of the allegations in the Club\u2019s answer or counterclaim in the prior action reveals that the Club had any knowledge regarding the manner in which USF&G handled the investigation of its claim. Moreover, the amended complaint in this case avers that it was not until 1996 that the Club discovered that Catherine Davis originally determined the CG-2150 amendment should apply to the Club\u2019s policy due to its liquor license, and that USF&G had deleted Davis\u2019 notes from the copy of the underwriting report previously provided to the Club during discovery (which fact helped form the basis for the Club\u2019s bad faith claim). The trial court did not err in denying USF&G\u2019s motions on these grounds. These assignments of error are overruled.\nII.\nUSF&G next argues that the trial court erred in denying its motions because the Club cannot maintain a claim under N.C. Gen. Stat. \u00a7 75-1.1 where there is no contractual right to coverage under the policy. Specifically, USF&G argues that such claims \u201care grounded in and arise from the contractual relationship between insurer and insured,\u201d and because the Club\u2019s policy did not provide coverage, it cannot maintain an \u201cextracontractual claim.\u201d\nWe need not engage in a discussion of whether a claim under N.C. Gen. Stat. \u00a7 75-1.1 in this context must be grounded in contract, as USF&G\u2019s argument is based on the faulty premise that the Club\u2019s policy did not provide coverage for the accident at issue. In fact, in Country Club I, this Court rejected this same argument and squarely established that the policy provided coverage to the Club. See Country Club of Johnston County, Inc., 135 N.C. App. at 165, 519 S.E.2d at 545. In that case, we noted that \u201cUSF&G has continued to insist the policy afforded no coverage and that the Club therefore may not assert a bad faith claim,\u201d despite the fact that such argument was already addressed and rejected in USF&G II. Id. at 165, 519 S.E.2d at 544. We went on to clarify:\nUSF&G also overlooks the estoppel effect of conduct comprising waiver. It is not that the conduct of USF&G and that of its agents has operated to write into the policy coverage previously excluded; rather, conduct comprising waiver has created a disability on the part of USF&G thereby precluding it from thereafter denying that such coverage is included within the policy.\nIn short, the issue in the instant case is no longer one of coverage ....\nId. at 165, 519 S.E.2d at 545. We have therefore previously established that the policy at issue provided coverage to the Club, and have already rejected the argument which USF&G has brought forth again here. This argument is overruled.\nIII.\nUSF&G further contends that the Club cannot maintain a claim under N.C. Gen. Stat. \u00a7 75-1.1 where it failed to plead and prove a claim under N.C. Gen. Stat. \u00a7 58-63-15(11), which sets forth various acts which constitute unfair claims settlement practices in the insurance industry. USF&G argues that in order to maintain a claim under Chapter 75, the Club was required to have established an unfair claims settlement practice under N.C. Gen. Stat. \u00a7 58-63-15(11), which also requires a showing that the act was committed \u201cwith such frequency as to indicate a general business practice.\u201d N.C. Gen. Stat. \u00a7 58-63-15(11). We likewise reject this argument.\nThis Court has noted \u201cthat unfair and deceptive acts in the insurance area are not regulated exclusively by Article 63 of Chapter 58, but are also actionable under N.C. Gen. Stat. \u00a7 75-1.1 (1988).\u201d Golden Rule Insurance Co. v. Long, 113 N.C. App. 187, 196, 439 S.E.2d 599, 604, appeal dismissed and disc. review denied, 335 N.C. 555, 439 S.E.2d 145 (1993). In Gray v. N.C. Ins. Underwriting Ass\u2019n, 352 N.C. 61, 529 S.E.2d 676, reh\u2019g denied, 352 N.C. 599, 544 S.E.2d 771 (2000), our Supreme Court observed that \u201c[although N.C.G.S. \u00a7 58-63-15(11) does regulate settlement claims in the insurance industry, insurance companies are not immune to the general principles and provisions of N.C.G.S. \u00a7 75-1.1.\u201d Id. at 71, 529 S.E.2d at 683. In Gray, the Supreme Court held that an insurer\u2019s act of failing to attempt in good faith to effectuate prompt and fair claims settlements is a violation of N.C. Gen. Stat. \u00a7 75-1.1 \u201cseparate and apart from any violation of N.C.G.S. \u00a7 58-63-15(11).\u201d Id. at 73, 529 S.E.2d at 684. The Court noted that having determined the insurer could violate N.C. Gen. Stat. \u00a7 75-1.1 separate and apart from N.C. Gen. Stat. \u00a7 58-63-15(11), it was unnecessary to determine whether the plaintiffs had established that the acts occurred with such frequency as to constitute a general business practice, as is required to show a violation of N.C. Gen. Stat. \u00a7 58-63-15(11). Id. at 74, 529 S.E.2d at 684.\nThis Court has also summarized the relationship between the two statutes:\nAn unfair or deceptive trade practice claim against an insurance company can be based on violations of either section 75-1.1 or section 58-63-15. A violation of section 58-63-15, however, constitutes a violation of section 75-1.1. Furthermore, the remedy for a violation of section 58-63-15 is the filing of a section 75-1.1 claim. There is no requirement, however, that a party bringing a claim for unfair or deceptive trade practices against an insurance company allege a violation of section 58-63-15 in order to bring a claim pursuant to section 75-1.1.\nLee v. Mut. Community Sav. Bank, 136 N.C. App. 808, 811 n.2, 525 S.E.2d 854, 857 n.2 (2000) (citations omitted) (emphasis added).\nMoreover, federal courts interpreting North Carolina law have also recognized that a party may bring an independent claim under N.C. Gen. Stat. \u00a7 75-1.1 against an insurer. In High Country Arts and Craft v. Hartford Fire Ins., 126 F.3d 629 (4th Cir. 1997), the United States Court of Appeals for the Fourth Circuit observed that\n[w]hile proof of unfair claims practices does constitute per se proof of an unfair or deceptive trade practice under N.C. Gen. Stat. \u00a7 75-1.1, failure to prove unfair claims practices [under N.C. Gen. Stat. \u00a7 58-63-15(11)] does not independently necessitate judgment as a matter of law against a related claim for unfair trade practices.\nId. at 635 (citations omitted).\nIn U.S. Fire Ins. Co. v. Nationwide Mut. Ins. Co., 735 F. Supp. 1320 (E.D.N.C. 1990), the Unites States District Court for the Eastern District of North Carolina observed that our courts have held that Chapter 58 \u201cis not the exclusive state remedy for unfair trade practices in the insurance industry.\u201d Id. at 1327. In that case, the insurer argued, as does USF&G in this case, that the plaintiffs were required to allege a violation of Chapter- 58 in order to show a violation of Chapter 75. The Court rejected the argument, stating that \u201c[a]bsent an explicit holding by the North Carolina courts that a plaintiff must prove a Chapter 58 violation to prove a Chapter 75 violation, this court will not impose such a requirement.\u201d Id.\nIn this case, USF&G has failed to cite any persuasive authority from this jurisdiction which would lead us to the conclusion that the Club had to establish a claim under N.C. Gen. Stat. \u00a7 58-63-15(11) in order to succeed on its claim under N.C. Gen. Stat. \u00a7 75-1.1. To the contrary, the case law cited herein establishes that an insurer may violate N.C. Gen. Stat. \u00a7 75-1.1 separate and apart from any violation of Chapter 58, and that a plaintiff need not prove a violation of Chapter 58 in order to recover for unfair and deceptive practices. Accordingly, this argument is overruled.\nIV.\nWe next address USF&G\u2019s claim that the Club failed to establish any misconduct on the part of USF&G or any aggravated circumstances necessary to support a claim under N.C. Gen. Stat. \u00a7 75-1.1. \u201cIn order to establish a violation of N.C.G.S. \u00a7 75-1.1, a plaintiff must show: (1) an unfair or deceptive act or practice, (2) in or affecting commerce, and (3) which proximately caused injury to plaintiffs.\u201d Gray, 352 N.C. at 68, 529 S.E.2d at 681. \u201c \u2018[A] practice is unfair when it offends established public policy as well as when the practice is immoral, unethical, oppressive, unscrupulous, or substantially injurious to consumers.\u2019 \u201d Id. (citation omitted). \u201cWhen \u2018an insurance company engages in conduct manifesting an inequitable assertion of power or position,\u2019 including conduct which can be characterized as \u2018unethical,\u2019 that \u2018conduct constitutes an unfair trade practice.\u2019 \u201d Johnson v. First Union Corp., 128 N.C. App. 450, 458, 496 S.E.2d 1, 6 (1998) (citation omitted) (holding insurer\u2019s act of altering an agreement and misrepresenting the plaintiffs work duties sufficient to support claim under N.C. Gen. Stat. \u00a7 75-1.1).\nAs we have held, a plaintiff is not required to prove a violation of N.C. Gen. Stat. \u00a7 58-63-15(11) in order to succeed on an independent claim under N.C. Gen. Stat. \u00a7 75-1.1. Nevertheless, we may look to the types of conduct prohibited by N.C. Gen. Stat. \u00a7 58-63-15(11) for examples of conduct which would constitute an unfair and deceptive act or practice. Gray, 352 N.C. at 71, 529 S.E.2d at 683. In Gray, the Supreme Court determined that when an insurer is guilty of failing to attempt in good faith to effectuate prompt and fair claims settlements where liability is reasonably clear, an act prohibited by N.C. Gen. Stat. \u00a7 58-63-15(ll)(f), the insurer \u201calso engages in conduct that embodies the broader standards of N.C.G.S. \u00a7 75-1.1 because such conduct is inherently unfair, unscrupulous, immoral, and injurious to consumers.\u201d Id. Thus, such an act constitutes a violation of N.C. Gen. Stat. \u00a7 75-1.1 \u201cwithout the necessity of an additional showing of frequency indicating a \u2018general business practice,\u2019 \u201d as is required under N.C. Gen. Stat. \u00a7 58-63-15(ll)(f). Id. It follows that the other prohibited acts listed in N.C. Gen. Stat. \u00a7 58-63-15(11) are also acts which are unfair, unscrupulous, and injurious to consumers, and that such acts therefore fall within the \u201cbroader standards\u201d of N.C. Gen. Stat. \u00a7 75-1.1.\nIn the present case, the trial court determined, as a matter of law, that USF&G\u2019s acts constituted a violation of N.C. Gen. Stat. \u00a7 75-1.1. See Gray, 352 N.C. at 68, 529 S.E.2d at 681 (the determination of whether an act or practice is an unfair or deceptive practice that violates N.C. Gen. Stat. \u00a7 75-1.1 is a question of law for the court, and may be based on the facts as determined by the jury). The trial court noted that it based its determination upon the jury\u2019s verdict with respect to the interrogatories, and \u201cthe Court\u2019s independent review of the evidence presented.\u201d As set forth in the interrogatories, the jury determined that USF&G \u201cprematurely and improperly\u201d determined it would deny the Club\u2019s claim prior to conducting a \u201cmeaningful investigation\u201d; that USF&G \u201cmisrepresent[ed]\u201d to the Club that it would investigate the claim and specifically, the application of Exclusion C when it had already concluded it would deny the claim; that USF&G \u201cunfairly\u201d and \u201cimproperly\u201d sent a reservation of rights letter based on Exclusion C without having \u201can adequate or documented basis to reverse Mr. Funk\u2019s position to not reserve rights as to Exclusion C documented on 11/19/91\u201d; and that USF&G solicited an opinion letter from counsel only after having made its decision regarding coverage.\nIn addition, in its order taxing attorney\u2019s fees and costs, the trial court made the following relevant findings of fact which are supported by the evidence: that \u201cUSF&G willfully engaged in the acts or practices at issue because, in its acts found by the jury, USF&G intended to deceive [the Club]\u201d; \u201cUSF&G decided to deny coverage, documented this decision internally, and then misrepresented to [the Club] that USF&G was investigating coverage\u201d; \u201cUSF&G knew that it prematurely and improperly denied [the Club] coverage without conducting a meaningful investigation and prior to obtaining an opinion letter from counsel\u201d; that \u201c[a]t the same time, USF&G misrepresented to [the Club] that USF&G was investigating the application of Exclusion C\u201d; and that despite knowledge that the Club\u2019s claim had merit and that the Club simply sought restitution, USF&G engaged in an unwarranted refusal to fully resolve the claims constituting the basis for this suit.\nWe hold that the evidence presented and the jury\u2019s verdict warrants a conclusion that USF&G\u2019s actions constituted a violation of N.C. Gen. Stat. \u00a7 75-1.1. We find support for this conclusion particularly in looking to N.C. Gen. Stat. \u00a7 58-63-15(11) for guidance as to what types of acts are inherently unfair, unscrupulous, and injurious to consumers. See Gray, 352 N.C. at 71, 529 S.E.2d at 683 (courts may look to types of conduct prohibited by N.C. Gen. Stat. \u00a7 58-63-15(11) for examples of conduct constituting unfair and deceptive acts under N.C. Gen. Stat. \u00a7 75-1.1). USF&G\u2019s conduct arguably violates at least one of the following acts prohibited by N.C. Gen. Stat. \u00a7 58-63-15(11): (1) \u201c[r]efusing to pay claims without conducting a reasonable investigation based upon all available information,\u201d N.C. Gen. Stat. \u00a7 58-63-15(ll)(d); (2) \u201c[flailing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim,\u201d N.C. Gen. Stat. \u00a7 58-63-15(ll)(n) (emphasis added); (3) \u201c[n]ot attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear,\u201d N.C. Gen. Stat. \u00a7 58-63-15(ll)(f); and (4) \u201c[misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue,\u201d N.C. Gen. Stat. \u00a7 58-63-15(ll)(a).\nMoreover, the jury\u2019s verdict that USF&G \u201cimproperly\u201d determined it would deny coverage, \u201cmisrepresent[ed]\u201d the nature of its investigation to the Club, and \u201cunfairly\u201d and \u201cimproperly\u201d cited Exclusion C as its basis to send a reservation of rights letter supports a conclusion that the insurer\u2019s acts were unethical and involved an unfair assertion of its power. Such acts also support the conclusion that a violation of N.C. Gen. Stat. \u00a7 75-1.1 has occurred. See Johnson, 128 N.C. App. at 458, 496 S.E.2d at 6; see also Miller v. Nationwide Mutual Ins. Co., 112 N.C. App. 295, 435 S.E.2d 537 (1993) (insurer\u2019s act in uniformly denying certain claims without first establishing a proper basis for refusal to pay sufficient to support claim under N.C. Gen. Stat. \u00a7 75-1.1), disc. review denied, 335 N.C. 770, 442 S.E.2d 519 (1994).\nIn summary, we uphold the trial court\u2019s conclusion of law that the evidence and the jury\u2019s verdict support a determination that USF&G violated N.C. Gen. Stat. \u00a7 75-1.1, notwithstanding that the jury returned two of six interrogatories in favor of USF&G. The trial court therefore did not err in denying USF&G\u2019s motions to dismiss, for directed verdict, and for judgment notwithstanding the verdict or new trial on this ground.\nV.\nFinally, USF&G maintains the trial court erred in taxing attorney\u2019s fees and costs under N.C. Gen. Stat. \u00a7 75-16.1 and asserts that the amount of fees and costs was unreasonable. Under N.C. Gen. Stat. \u00a7 75-16.1, a trial court has discretion in actions based upon a violation of N.C. Gen. Stat. \u00a7 75-1.1 to award attorney\u2019s fees where the trial court determines that \u201c[t]he party charged with the violation has willfully engaged in the act or practice, and there was an unwarranted refusal by such party to fully resolve the matter which constitutes the basis of such suit.\u201d N.C. Gen. Stat. \u00a7 75-16.1(1). An award or denial of attorney\u2019s fees under this section is within the sound discretion of the trial court. Southern Bldg. Maintenance v. Osborne, 127 N.C. App. 327, 335, 489 S.E.2d 892, 897 (1997).\nIn this case, the trial court made extensive findings, including the required findings regarding the willful nature of USF&G\u2019s acts and its unwillingness to facilitate a resolution of the matter. Based on its extensive findings, the trial court concluded that USF&G had both willfully engaged in the acts at issue and engaged in an unwarranted refusal to fully resolve the Club\u2019s claims. Given our review of the evidence, we cannot conclude that the trial court\u2019s findings and conclusion are wholly unsupported or that the decision to award fees was either \u201c \u2018manifestly unsupported by reason\u2019 \u201d or \u201c \u2018so arbitrary that it could not have been the result of a reasoned decision.\u2019 \u201d See Williams v. McCoy, 145 N.C. App. 111, 117, 550 S.E.2d 796, 801 (2001) (citation omitted) (defining abuse of discretion standard).\nIn addition, the trial court must make findings as to whether the amount of attorney\u2019s fees is reasonable. Barbee v. Atlantic Marine Sales & Service, 115 N.C. App. 641, 648, 446 S.E.2d 117, 122, disc. review denied, 337 N.C. 689, 448 S.E.2d 516 (1994). To that end, appropriate findings would include those addressed to the time and labor expended by the attorney, the skill required to perform the services rendered, the experience and ability of the attorney, and the customary fee for like work. Id.\nThe trial court in this case made all required findings, including (1) that the case involved difficult issues which warranted the involvement of more than one attorney for the Club; (2) that USF&G had at least two and sometimes three attorneys assisting with its case; (3) that it was reasonable for the Club to seek the legal assistance of the counsel involved in the trial, as both attorneys had prior involvement in the case and possessed significant knowledge of the facts and legal issues that were crucial to successful prosecution of the Club\u2019s claims; (4) that the Club\u2019s attorneys have extensive experience and provided high quality legal services that enabled the Club to obtain a favorable judgment in a very difficult case; (5) that the attorneys\u2019 rates were reasonable and consistent with those charged by attorneys with equivalent expertise and experience; (6) that the Club\u2019s attorneys divided duties in a reasonable manner so as to avoid duplication of services; (7) that the affidavits provided by both attorneys accurately reflect the services provided; and (8) that these services were reasonable and necessary for prosecution of the Club\u2019s claims. The trial court also made findings regarding the exact time expended by each attorney.\nThe trial court\u2019s extensive findings are sufficiently supported by evidence in the record. USF&G has failed to persuade us that the trial court\u2019s award of attorney\u2019s fees is manifestly unsupported by reason or wholly arbitrary. Accordingly, and for all reasons stated herein, we uphold the decisions of the trial court with respect to the denials of USF&G\u2019s motions, and we conclude that the trial was free of error.\nNo error.\nJudges WALKER and BRYANT concur.\n. Although Exclusion C is entitled \u201cAmendment of Liquor Liability Exclusion,\u201d we note that the exclusions applied to all \u201calcoholic beverages.\u201d", "type": "majority", "author": "HUNTER, Judge." } ], "attorneys": [ "W. Brian Howell, P.A., by W. Brian Howell and T. Cooper Howell; Armstrong & Armstrong, P.A., by L. Lamar Armstrong, Jr., for plaintiff-appellee.", "Wilson & Iseman, by G. Gray Wilson and Kevin B. Cartledge, for defendant-appellant." ], "corrections": "", "head_matter": "THE COUNTRY CLUB OF JOHNSTON COUNTY, INC., Plaintiff v. UNITED STATES FIDELITY & GUARANTY COMPANY, Defendant\nNo. COA01-726\n(Filed 21 May 2002)\n1. Collateral Estoppel and Res Judicata\u2014 claim-splitting\u2014 compulsory counterclaims\nThe trial court did not err in an unfair and deceptive trade practices case by denying defendant insurance company\u2019s motions to dismiss, for directed verdict, and for judgment notwithstanding the verdict or new trial even though defendant contends plaintiff insured\u2019s claims should have been barred by the rule against claim-splitting and plaintiff\u2019s claims were required to be brought as compulsory counterclaims in defendant\u2019s declaratory judgment action, because: (1) the instant case involves different claims than those involved in the declaratory judgment action; and (2) defendant failed to establish that the claims presented are compulsory counterclaims under N.C.G.S. \u00a7 1A-1, Rule 13(a) since it has failed to established that plaintiff knew or reasonably should have known of all material facts necessary to assert all claims.\n2. Unfair Trade Practices\u2014 insurance policy \u2014 contractual right to coverage\nThe trial court did not err in an unfair and deceptive trade practices case by denying defendant insurance company\u2019s motions to dismiss, for directed verdict, and for judgment notwithstanding the verdict or new trial even though defendant contends plaintiff insured cannot maintain a claim under N.C.G.S. \u00a7 75-1.1 where there is no contractual right to coverage under the insurance policy, because: (1) defendant\u2019s argument is based on the faulty premise that plaintiffs policy did not provide coverage for the accident at issue; and (2) it has already been established that the policy at issue provided coverage to plaintiff.\n3. Unfair Trade Practices\u2014 insurance policy \u2014 unfair claims settlement practices in insurance industry\nAlthough defendant insurance company contends plaintiff insured cannot maintain a claim under N.C.G.S. \u00a7 75-1.1 where it failed to plead and prove a claim under N.C.G.S. \u00a7 58-63-15(11) which sets forth various acts which constitute unfair claims settlement practices in the insurance industry, an insurer may violate N.C.G.S. \u00a7 75-1.1 separate and apart from a violation of Chapter 58 and a plaintiff need not prove a violation of Chapter 58 in order to recover for unfair and deceptive trade practices.\n4. Unfair Trade Practices\u2014 misconduct \u2014 aggravating circumstance\nThe trial court did not err by concluding that plaintiff insured established misconduct on the part of defendant insurance company or an aggravating circumstance necessary to support an unfair and deceptive trade practices claim under N.C.G.S. \u00a7 75-1.1, because: (1) courts may look to types of conduct prohibited by N.C.G.S. \u00a7 58-63-15(11) for examples of conduct constituting unfair and deceptive acts under N.C.G.S. \u00a7 75-1.1, and defendant\u2019s actions violated at least one of the acts prohibited by N.C.G.S. \u00a7 58-63-15(11); and (2) the jury\u2019s verdict that defendant improperly determined it would deny coverage, misrepresented the nature of its investigation to plaintiff, and unfairly and improperly cited an exclusion as its basis to send a reservation of rights letter supports a conclusion that the insurer\u2019s acts were unethical and involved an unfair assertion of its power.\n5. Costs\u2014 attorney fees \u2014 reasonableness\u2014unfair and deceptive trade practices\nThe trial court did not abuse its discretion in an unfair and deceptive trade practices case by awarding costs and attorney fees under N.C.G.S. \u00a7 75-16.1 to plaintiff, because: (1) the trial court made extensive findings, including the required findings regarding the willful nature of defendant\u2019s acts and its unwillingness to facilitate a resolution of the matter; and (2) the trial court made appropriate findings concerning the reasonableness of attorney fees, including those addressed to the time and labor expended by the attorney, the skill required to perform the services rendered, the experience and ability of the attorney, and the customary fee for like work.\nAppeal by defendant from judgment and orders entered 27 November 2000 by Judge Jack A. Thompson in Johnston County Superior Court. Heard in the Court of Appeals 13 March 2002.\nW. Brian Howell, P.A., by W. Brian Howell and T. Cooper Howell; Armstrong & Armstrong, P.A., by L. Lamar Armstrong, Jr., for plaintiff-appellee.\nWilson & Iseman, by G. Gray Wilson and Kevin B. Cartledge, for defendant-appellant." }, "file_name": "0231-01", "first_page_order": 261, "last_page_order": 279 }