{ "id": 4160021, "name": "GREAT AMERICAN INSURANCE CO., Plaintiff v. TRENTON FREEMAN, Defendant", "name_abbreviation": "Great American Insurance v. Freeman", "decision_date": "2008-09-02", "docket_number": "No. COA07-659", "first_page": "497", "last_page": "504", "citations": [ { "type": "official", "cite": "192 N.C. App. 497" } ], "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": "479 S.E.2d 209", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1996, "opinion_index": 0 }, { "cite": "345 N.C. 183", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 53960 ], "year": 1996, "opinion_index": 0, "case_paths": [ "/nc/345/0183-01" ] }, { "cite": "473 S.E.2d 15", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1996, "pin_cites": [ { "page": "18" } ], "opinion_index": 0 }, { "cite": "123 N.C. App. 418", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 11913530 ], "year": 1996, "opinion_index": 0, "case_paths": [ "/nc-app/123/0418-01" ] }, { "cite": "N.C. Gen. Stat. \u00a7 58-36-1", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "year": 2007, "pin_cites": [ { "parenthetical": "limiting Rate Bureau's jurisdiction to those motor vehicle policies covering \"nonfleet private passenger motor vehicles\"" } ], "opinion_index": 0 }, { "cite": "584 S.E.2d 857", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 2003, "pin_cites": [ { "page": "860", "parenthetical": "quoting Hlasnick, 136 N.C. App. at 325, 524 S.E.2d at 389" } ], "opinion_index": 0 }, { "cite": "160 N.C. App. 217", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8955154 ], "year": 2003, "pin_cites": [ { "page": "222", "parenthetical": "quoting Hlasnick, 136 N.C. App. at 325, 524 S.E.2d at 389" } ], "opinion_index": 0, "case_paths": [ "/nc-app/160/0217-01" ] }, { "cite": "539 S.E.2d 274", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 2000, "opinion_index": 0 }, { "cite": "353 N.C. 240", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 135640 ], "year": 2000, "opinion_index": 0, "case_paths": [ "/nc/353/0240-01" ] }, { "cite": "524 S.E.2d 386", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 14, "year": 2000, "pin_cites": [ { "page": "389" }, { "page": "390" }, { "page": "390" }, { "page": "389" }, { "page": "389" }, { "page": "389" }, { "page": "390" }, { "page": "389" }, { "page": "390" } ], "opinion_index": 0 }, { "cite": "136 N.C. App. 320", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 11239477 ], "weight": 6, "year": 2000, "pin_cites": [ { "page": "324-25" }, { "page": "325-26" }, { "page": "326" }, { "page": "325" }, { "page": "325" }, { "page": "325" } ], "opinion_index": 0, "case_paths": [ "/nc-app/136/0320-01" ] }, { "cite": "459 S.E.2d 275", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 4, "year": 1995, "pin_cites": [ { "page": "279", "parenthetical": "internal citation omitted" }, { "page": "279" } ], "opinion_index": 0 }, { "cite": "119 N.C. App. 444", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 11915984 ], "weight": 2, "year": 1995, "pin_cites": [ { "page": "450", "parenthetical": "internal citation omitted" }, { "page": "450" } ], "opinion_index": 0, "case_paths": [ "/nc-app/119/0444-01" ] }, { "cite": "N.C. Gen. Stat. \u00a7 58-40-10", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "year": 2007, "pin_cites": [ { "page": "(2)" } ], "opinion_index": 0 }, { "cite": "N.C. Gen. Stat. \u00a7 20-279.32", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "year": 2007, "pin_cites": [ { "parenthetical": "exempting motor vehicles owned and operated by \"for-hire motor carrier[s]\" or by federal, state, or local governments" } ], "opinion_index": 0 }, { "cite": "N.C. Gen. Stat. \u00a7\u00a7 20-279.1", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "opinion_index": 0 }, { "cite": "N.C. Gen. Stat. \u00a7 20-279.21", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "weight": 8, "year": 2007, "pin_cites": [ { "page": "(b)(4)" }, { "page": "(b)(4)" }, { "page": "(b)(4)" }, { "page": "(b)(4)" }, { "page": "(b)(4)" }, { "page": "(b)(4)" }, { "page": "(b)(4)" }, { "page": "(b)(4)" } ], "opinion_index": 0 } ], "analysis": { "cardinality": 649, "char_count": 18963, "ocr_confidence": 0.761, "pagerank": { "raw": 4.03580807328026e-08, "percentile": 0.13561118814262915 }, "sha256": "24ec6afe2f1e9b0f9d00a1f7b947098ccd8d0f448b2f12ea047152cc7c279d15", "simhash": "1:49eb1112da4b0d60", "word_count": 2993 }, "last_updated": "2023-07-14T14:54:33.452279+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Judges MCCULLOUGH and STEELMAN concur." ], "parties": [ "GREAT AMERICAN INSURANCE CO., Plaintiff v. TRENTON FREEMAN, Defendant" ], "opinions": [ { "text": "GEER, Judge.\nPlaintiff Great American Insurance Co. appeals from the trial court\u2019s order concluding that its motor vehicle insurance policy with Omega Development Co., LLC provided underinsured motorist (\u201cUIM\u201d) coverage in the amount of $1,000,000.00 to defendant Trenton Freeman, an Omega Development employee. While Great American contends that since its policy was a fleet policy, it was exempt from any statutory requirement that it obtain a rejection or selection of policy limits for UIM coverage, we read the controlling statute differently. Under N.C. Gen. Stat. \u00a7 20-279.21(b)(4) (2007), Great American was not subject to the jurisdiction of the North Carolina Rate Bureau and, therefore, was not required to use the Rate Bureau approved form, but it nonetheless was required to prove that Omega Development had validly rejected UIM coverage or selected alternative UIM coverage limits. As the record is devoid of any evidence that Omega Development made such a rejection or selection, we affirm the trial court\u2019s order.\nFacts\nOn 24 September 2004, Freeman was an employee of Omega Development. Freeman had been assigned the use of a company-owned truck that day, but \u201cbecause it was a pretty day outside,\u201d he decided to ride his motorcycle, which he personally owned and insured. An underinsured motorist ran a stop sign and struck Freeman\u2019s motorcycle, causing Freeman to sustain severe injuries that, in part, necessitated the amputation of his left leg.\nOmega Development had a business automobile insurance policy issued by Great American that was in effect on 24 September 2004. Omega Development submitted its original insurance application to Great American for this policy in December 2000. The application contained a list of available coverage categories, including liability, uninsured motorist (\u201cUM\u201d), and UIM coverages. Next to each coverage category, there was a space for the applicant to place an \u201cX\u201d to indicate selection of that type of coverage. The application also provided options within each of the coverage categories to select different kinds of motor vehicles that would be \u201ccovered autos\u201d within those categories.\nIn its application, Omega Development selected liability insurance coverage in the amount of $1,000,000.00 for \u201cany \u2018auto\u2019 \u201d within the list of \u201ccovered autos\u201d options. Omega Development, however, failed to make any selection on the application regarding UIM coverage.\nThe application also contained a separate section listing various options from which Omega Development could choose regarding selection or rejection of UM or UIM coverage. There was a signature line next to each of the options, but Omega Development left all of the signature lines blank.\nGreat American subsequently issued a policy that provided Omega Development with liability coverage in the amount of $1,000,000.00 for \u201cany \u2018auto.\u2019 \u201d With respect to UM/UIM coverage, the policy provided $1,000,000.00 coverage, but defined \u201ccovered autos\u201d for UM/UIM purposes as \u201conly those autos described in Item Three of the declarations .. . .\u201d Freeman\u2019s motorcycle was not one of the vehicles identified on the declarations page.\nGreat American filed a declaratory judgment action in Durham County Superior Court on 30 June 2006, seeking a declaration that its policy with Omega Development did not provide UIM coverage for Freeman\u2019s injuries resulting from the 24 September 2004 accident. Following a bench trial, the trial court entered an order on 2 February 2007 concluding that Great American bore the burden of proving that Omega Development had made a valid rejection of UIM coverage or had selected different limits for UIM coverage; that Great American had failed to satisfy this burden; and as a result, that its policy provided UIM coverage for Freeman\u2019s accident in the amount of $1,000,000.00. Great American timely appealed to this Court.\nDiscussion\nThe sole issue in this appeal is whether the policy issued by Great American to Omega Development provided UIM coverage for Freeman\u2019s accident. North Carolina\u2019s Motor Vehicle Safety and Financial Responsibility Act (\u201cthe Act\u201d), N.C. Gen. Stat. \u00a7\u00a7 20-279.1 to -279.39 (2007), establishes the requirements for North Carolina motor vehicle insurance liability policies, although it exempts from its coverage certain types of policies. See N.C. Gen. Stat. \u00a7 20-279.32 (2007) (exempting motor vehicles owned and operated by \u201cfor-hire motor carrier[s]\u201d or by federal, state, or local governments). Although the policy issued to Omega Development is a fleet policy because it covers five or more vehicles leased or owned by Omega Development, see N.C. Gen. Stat. \u00a7 58-40-10(2) (2007), fleet policies do not fall within any of the exceptions to the Act. Accordingly, the terms of the Act apply to the Omega Development policy.\nThe Act\u2019s requirements with respect to UIM coverage are laid out in N.C. Gen. Stat. \u00a7 20-279.21(b)(4), which states in pertinent part:\nThe coverage required under this subdivision shall not be applicable where any insured named in the policy rejects the coverage. An insured named in the policy may select different coverage limits as provided in this subdivision. If the named insured does not reject underinsured motorist coverage and does not select different coverage limits, the amount of underinsured motorist coverage shall be equal to the highest limit of bodily injury liability coverage for any one vehicle in the policy.\nAs this Court explained in Hendrickson v. Lee, 119 N.C. App. 444, 450, 459 S.E.2d 275, 279 (1995) (internal citation omitted), under N.C. Gen. Stat. \u00a7 20-279.21(b)(4), \u201calthough an insured is not legally obligated to contract for UIM coverage in any amount, UIM coverage equal to a policy\u2019s liability limits will be assumed unless the insured validly rejects that amount of coverage.\u201d\nFleet policies, such as the one issued to Omega Development, are required to provide UIM coverage in accordance with N.C. Gen. Stat. \u00a7 20-279.21(b)(4). Hlasnick v. Federated Mut. Ins. Co., 136 N.C. App. 320, 324-25, 524 S.E.2d 386, 389, aff\u2019d in part on other grounds and disc, review improvidently allowed in part, 353 N.C. 240, 539 S.E.2d 274 (2000). As this Court explained in Hlasnick, N.C. Gen. Stat. \u00a7 20-279.21(b)(4) sets the \u201cfloor\u201d for UIM coverage that insurers must provide \u2014 necessarily including fleet policies \u2014 although the insured has the freedom to reject all UIM coverage or to select different coverage limits so long as the limits meet the statutory minimum. 136 N.C. App. at 325-26, 524 S.E.2d at 390.\nFor all policies not exempt from the Act, there must be a rejection of UIM coverage or a selection of alternative coverage limits to avoid the incorporation of the UIM coverage limits dictated by N.C. Gen. Stat. \u00a7 20-279.21(b)(4). Hlasnick, 136 N.C. App. at 326, 524 S.E.2d at 390. For policies within the jurisdiction of the North Carolina Rate Bureau, \u201c[r]ejection of or selection of different coverage limits for underinsured motorist coverage . . . shall be made in writing by the named insured on a form promulgated by the Bureau and approved by the Commissioner of Insurance.\u201d N.C. Gen. Stat.' \u00a7 20-279.21(b)(4). \u201cOnly when issuing insurance policies outside the jurisdiction of the Rate Bureau may the insurer \u2018permissibly use[] its own form for selection or rejection of underinsured motorist coverage.\u2019 \u201d Erie Ins. Exch. v. Miller, 160 N.C. App. 217, 222, 584 S.E.2d 857, 860 (2003) (quoting Hlasnick, 136 N.C. App. at 325, 524 S.E.2d at 389).\nBecause the- Omega Development policy was a fleet policy, it was not subject to the Rate Bureau\u2019s jurisdiction. N.C. Gen. Stat. \u00a7 58-36-1 (2007) (limiting Rate Bureau\u2019s jurisdiction to those motor vehicle policies covering \u201cnonfleet private passenger motor vehicles\u201d). Therefore, as Hlasnick confirms, Great American could \u201cpermissibly use[] its own form for selection or rejection of under-insured motorist coverage.\u201d 136 N.C. App. at 325, 524 S.E.2d at 389.\nGreat American contends that because the policy is not within the Rate Bureau\u2019s jurisdiction no \u201cselection/rejection form\u201d or \u201cwritten rejection\u201d was required at all and, therefore, the trial court erred in concluding that Great American failed to meet its burden of proving that Omega Development selected alternative coverage for UIM coverage. While Hlasnick stated that N.C. Gen. Stat. \u00a7 20-279.21(b)(4) \u201crequires that rejection be in writing only when the policy is under Rate Bureau jurisdiction,\u201d 136 N.C. App. at 325, 524 S.E.2d at 389, nothing in Hlasnick frees an insurer from having to prove that the insured in fact rejected or selected different UIM coverage limits.\nInstead, in Hlasnick, this Court determined that the rejection of UIM coverage could be inferred from the form used by the insurer. Id., 524 S.E.2d at 390. That form included a space that the insured could mark to select coverage, but it did not have a place for the insured to indicate rejection of UIM coverage or selection of other limits. Id., 524 S.E.2d at 389. The Court concluded that since the insured did not choose to select UIM coverage, it could be inferred that the insured intended to reject coverage. Id., 524 S.E.2d at 390. According to Hlasnick, the insurer\u2019s form met the \u201cbare statutory requirements\u201d for rejection. Id. We stressed, however, that \u201cit would be preferable if the form contained a written provision allowing an insured unambiguously to reject such coverage . . . .\u201d Id. Thus, Hlasnick acknowledges that there are still \u201cstatutory requirements\u201d for proving that an insured has rejected UIM coverage.\nIn this case, because of the nature of the Great American application form, the inference found sufficient to prove rejection in Hlasnick cannot be drawn. Great American used a form that contained a provision that allowed Omega Development to unambiguously reject UIM coverage or select alternative coverage limits, but Omega Development did not do so.\nThe insurance application contained a section titled \u201cUNINSURED AND UNDERINSURED MOTORISTS COVERAGE\u201d with instructions to \u201c[c]heck the appropriate box(es) below and sign where applicable.\u201d The application then provided:\nI understand and acknowledge that uninsured motorist (UM) and underinsured motorist (UIM) coverages have been explained to me. I have been offered the options of:\n( ) Selecting UM and UIM limits equal to my liability limits,\n( ) Selecting UM and UIM limits lower than my liability limits, or\n( ) Rejecting coverage entirely.\nI understand that the coverage selection and limit choices indicated here will apply to all future policy renewals, continuations and changes unless I notify you otherwise in writing.\n1. I select UM and UIM limits indie[ated] in this application]\n2. I reject UM bodily injury coverage\n3. I reject UIM bodily injury coverage\n4. I reject UM property damage coverage\n5. I reject UIM property damage coverage\nNext to each of the options numbered one through five, there was a space for \u201capplicant\u2019s signature.\u201d\nIn Omega Development\u2019s completed application, there were no marks indicating that any of the options had been offered to Omega Development, and the spaces for signatures next to the options being selected were all left blank. In addition, on the application\u2019s first page, where the applicant could place an \u201cX\u201d beside the type of coverage selected and the types of motor vehicles that would be \u201ccovered autos\u201d for each type of coverage, Omega Development did not indicate that it was selecting UM or UIM coverage or designate the type of vehicles that would be \u201ccovered autos\u201d for UM/UIM coverage.\nThus, in this case, the insured had the option to either select UIM coverage or reject UIM coverage, and it did neither. The insured had the option of selecting a different definition of \u201ccovered autos\u201d than it did for its liability coverage, but it did not do so. We cannot, therefore, draw from these facts any inference that Omega Development intended to select a different type of coverage for UIM than for liability. Such an inference on these facts would amount to mere speculation.\nIn the absence of the inference found in Hlasnick, the record in this case contains no evidence of any rejection or selection of alternative coverage limits with respect to UIM coverage, oral or written. The trial court, therefore, correctly determined that Great American failed to meet its burden of proving that Omega Development had selected different UIM coverage.\nAs a consequence, N.C. Gen. Stat. \u00a7 20-279.21(b)(4) applies: \u201cIf the named insured does not reject underinsured motorist coverage and does not select different coverage limits, the amount of underinsured motorist coverage shall be equal to the highest limit of bodily injury liability coverage for any one vehicle in the policy.\u201d This Court construed \u00a7 20-279.21(b)(4) in Vasseur v. St. Paul Mut. Ins. Co., 123 N.C. App. 418, 473 S.E.2d 15, disc. review denied, 345 N.C. 183, 479 S.E.2d 209 (1996).\nIn Vasseur, the plaintiff, who was riding his own motorcycle, was struck by an underinsured vehicle while in the course and scope of his employment. The plaintiff sought UIM coverage under his employer\u2019s policy. That policy provided $1,000,000.00 in liability coverage for \u201cany auto,\u201d which included vehicles not owned by the employer, but owned by employees and used for the employer\u2019s business. UIM coverage was, however, restricted to \u201cany owned autos\u201d\u2014 vehicles actually owned by the employer. Although there was no dispute that the insurer had failed to obtain the statutorily-required rejection of UIM coverage, the insurer argued \u2014 like Great American here \u2014 that \u201can insurer may restrict UIM coverage only to certain automobiles covered under a policy\u2019s liability provisions without receiving the statutorily-required rejection of UIM insurance.\u201d Id. at 423, 473 S.E.2d at 18. This Court rejected that argument, reasoning:\nRestriction of UIM coverage only to certain of the autos covered under a policy necessarily involves \u201crejection\u201d of UIM coverage for those autos afforded liability coverage but not UIM coverage. This \u201crejection\u201d must therefore comply with the mandates of G.S. \u00a7 20-279.21(b)(4). [The employer] executed no rejection form in accordance with G.S. \u00a7 20-279.21(b)(4), and thus did not validly reject UIM coverage for \u201cnonowned autos.\u201d See Hendrickson, 119 N.C. App. at 450, 459 S.E.2d at 279. [The employee\u2019s policy with defendant therefore provided $1,000,000 UIM coverage upon such autos.\nId.\nIn Omega Development\u2019s policy with Great American, the highest limit of bodily injury liability coverage for purposes of \u00a7 20-279.21(b)(4) is $1,000,000.00 for \u201cany \u2018auto.\u2019 \u201d The policy, however, provides UIM coverage to only \u201cspecifically described \u2018autos\u2019 \u201d set out in the declarations, which in turn listed only vehicles owned by Omega Development. Since we have concluded that Great American failed to prove that Omega Development either rejected UIM coverage for autos that it did not own or selected a different scope of coverage for UIM, Vasseur compels the conclusion that the policy\u2019s liability limit of $1,000,000.00 for \u201cany \u2018auto\u2019 \u201d applies with respect to UIM coverage.\nThe Omega Development policy defines an \u201cauto\u201d as \u201ca land motor vehicle, \u2018trailer\u2019 or semitrailer designed for travel on public roads but does not include \u2018mobile equipment.\u2019 \u201d Its definition of \u201cany \u2018auto\u2019 \u201d encompasses \u201cnonowned \u2018autos,\u2019 \u201d which includes \u201cthose \u2018autos\u2019 you do not own, lease, hire, rent or borrow that are used in connection with your business. This includes \u2018autos\u2019 owned by your \u2018employees\u2019... but only while used in your business or your personal affairs.\u201d Because Freeman, an employee of Omega Development, was using his motorcycle in Omega Development\u2019s business, it falls within the policy\u2019s definition of \u201cany \u2018auto\u2019 \u201d and is a \u201ccovered auto\u201d under Great American\u2019s policy. Accordingly, the trial court properly concluded that Omega Development\u2019s policy with Great American provide UIM coverage in the amount of $1,000,000.00 for Freeman\u2019s injuries resulting from the 24 September 2004 accident. The trial court\u2019s declaratory judgment order is, therefore, affirmed.\nAffirmed.\nJudges MCCULLOUGH and STEELMAN concur.\n. This provision was substantially amended by 2008 N.C. Sess. Laws ch. 124, sec. 1.1, to provide in pertinent part: \u201cNotwithstanding the provisions of this subsection, no policy of motor vehicle liability insurance applicable solely to commercial motor vehicles as defined in G.S. 20-4.01(3D) or applicable solely to fleet vehicles shall be required to provide underinsured motorist coverage.\u201d This amendment is effective 1 January 2009 and applies to policies issued or renewed on or after that date. Id. sec. 12.1.\n. While Great American contends that Vasseur is inapplicable to this case because it did not involve a fleet policy, the nature of the policy \u2014 fleet or non-fleet \u2014 is relevant only in deciding what was required for there to be a valid rejection of UIM coverage or a valid selection of UIM limits different from those provided for liability coverage. Nothing in \u00a7 20-279.21(b)(4) suggests that the consequences of an invalid rejection or selection are different for fleet policies and non-fleet policies.", "type": "majority", "author": "GEER, Judge." } ], "attorneys": [ "Edgar & Paul, by Patrick M. Anders, for plaintiff-appellant.", "Kirby & Holt, L.L.P., by David F. Kirby, Isaac L. Thorp, and William B. Bystrynski, for defendant-appellee." ], "corrections": "", "head_matter": "GREAT AMERICAN INSURANCE CO., Plaintiff v. TRENTON FREEMAN, Defendant\nNo. COA07-659\n(Filed 2 September 2008)\nInsurance\u2014 automobile \u2014 UIM coverage \u2014 fleet policy \u2014 valid rejection or selection required\nThe trial court did not err in a declaratory judgment action by concluding that Omega Development\u2019s fleet policy with plaintiff insurance company provided underinsured motorist (UIM) coverage in the amount of $1,000,000 for defendant employee\u2019s injuries resulting from a 24 September 2004 accident because: (1) N.C.G.S. \u00a7 20-279.21(b)(4) provides that although plaintiff\u2019s fleet policy was not subject to the jurisdiction of the North Carolina Rate Bureau and was thus not required to use the Rate Bureau\u2019s approved form, plaintiff nonetheless was required to prove that Omega Development had validly rejected UIM coverage or selected alternative UIM coverage limits; and (2) the record was devoid of any evidence that Omega Development made such a rejection or selection. As a consequence, N.C.G.S. \u00a7 20-279.21(b)(4) provides that if the named insured does not reject UIM coverage and does not select different coverage limits, the amount of UIM coverage shall be equal to the highest limit of bodily injury liability coverage for any one vehicle in the policy. Further, defendant employee\u2019s use of his own motorcycle in Omega Development\u2019s business fell within the policy\u2019s definition of \u201cany auto\u201d and was a \u201ccovered auto\u201d under the policy.\nAppeal by plaintiff from order entered 2 February 2007 by Judge Ripley E. Rand in Durham County Superior Court. Heard in the Court of Appeals 28 November 2007.\nEdgar & Paul, by Patrick M. Anders, for plaintiff-appellant.\nKirby & Holt, L.L.P., by David F. Kirby, Isaac L. Thorp, and William B. Bystrynski, for defendant-appellee." }, "file_name": "0497-01", "first_page_order": 525, "last_page_order": 532 }