{ "id": 4033846, "name": "JAMES D. CREED, Plaintiff-Appellant v. BRETT A. SMITH and CAROLYN JEANETTE WYATT, Defendants-Appellees", "name_abbreviation": "Creed v. Smith", "decision_date": "2012-08-21", "docket_number": "No. COA11-1469", "first_page": "330", "last_page": "336", "citations": [ { "type": "official", "cite": "222 N.C. App. 330" } ], "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": "643 S.E.2d 58", "category": "reporters:state_regional", "reporter": "S.E.2d", "case_ids": [ 12638106 ], "year": 2007, "pin_cites": [ { "page": "61-62" } ], "opinion_index": 0, "case_paths": [ "/se2d/643/0058-01" ] }, { "cite": "564 S.E.2d 910", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 2002, "pin_cites": [ { "page": "913", "parenthetical": "holding that it is not the prerogative of the North Carolina Court of Appeals to reconsider the North Carolina Supreme Court's application of a gross negligence standard for an officer in pursuit" } ], "opinion_index": 0 }, { "cite": "151 N.C. App. 281", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 9080053 ], "year": 2002, "pin_cites": [ { "page": "285", "parenthetical": "holding that it is not the prerogative of the North Carolina Court of Appeals to reconsider the North Carolina Supreme Court's application of a gross negligence standard for an officer in pursuit" } ], "opinion_index": 0, "case_paths": [ "/nc-app/151/0281-01" ] }, { "cite": "259 S.E.2d 552", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1979, "opinion_index": 0 }, { "cite": "298 N.C. 494", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8572813 ], "year": 1979, "opinion_index": 0, "case_paths": [ "/nc/298/0494-01" ] }, { "cite": "253 S.E.2d 629", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1979, "pin_cites": [ { "page": "630" } ], "opinion_index": 0 }, { "cite": "40 N.C. App. 641", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8552500 ], "year": 1979, "pin_cites": [ { "page": "643" } ], "opinion_index": 0, "case_paths": [ "/nc-app/40/0641-01" ] }, { "cite": "390 S.E.2d 150", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1990, "pin_cites": [ { "page": "155", "parenthetical": "finding that if an insurer \"merely tenders its limits without obtaining a settlement of any claim for its insured, a strong argument can be made that it has neither 'exhausted' its policy limits nor fulfilled its fiduciary duty to discharge its policy obligations[.]\"" } ], "opinion_index": 0 }, { "cite": "326 N.C. 387", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 5307211 ], "year": 1990, "pin_cites": [ { "page": "396" } ], "opinion_index": 0, "case_paths": [ "/nc/326/0387-01" ] }, { "cite": "182 N.C. App. 707", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8175952 ], "year": 2007, "pin_cites": [ { "page": "710-11" } ], "opinion_index": 0, "case_paths": [ "/nc-app/182/0707-01" ] }, { "cite": "599 S.E.2d 549", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 6, "year": 2004, "pin_cites": [ { "page": "552", "parenthetical": "\"Questions concerning the meaning of contractual provisions in an insurance policy are reviewed de novo on appeal.\"" }, { "page": "555" }, { "page": "551" }, { "page": "556" }, { "page": "555" } ], "opinion_index": 0 }, { "cite": "358 N.C. 691", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2987471 ], "weight": 5, "year": 2004, "pin_cites": [ { "page": "693", "parenthetical": "\"Questions concerning the meaning of contractual provisions in an insurance policy are reviewed de novo on appeal.\"" }, { "page": "698" }, { "page": "692" }, { "page": "701" }, { "page": "698" } ], "opinion_index": 0, "case_paths": [ "/nc/358/0691-01" ] }, { "cite": "554 S.E.2d 676", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 2001, "pin_cites": [ { "page": "678", "parenthetical": "\"[A] trial court's conclusion as to whether a particular dispute is subject to arbitration is a conclusion of law, reviewable de novo by the appellate court.\"" } ], "opinion_index": 0 }, { "cite": "147 N.C. App. 133", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 9378395 ], "year": 2001, "pin_cites": [ { "page": "136", "parenthetical": "\"[A] trial court's conclusion as to whether a particular dispute is subject to arbitration is a conclusion of law, reviewable de novo by the appellate court.\"" } ], "opinion_index": 0, "case_paths": [ "/nc-app/147/0133-01" ] }, { "cite": "N.C. Gen. Stat. \u00a7 20-279.21", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "weight": 10, "pin_cites": [ { "page": "(b)(4)" }, { "page": "(b)(4)" }, { "page": "(b)(4)" }, { "page": "(b)(4)" }, { "page": "(b)(4)" }, { "page": "(b)(4)", "parenthetical": "\"Exhaustion ... is deemed to occur when either (a) the limits of the liability per claim have been paid upon the claim, or (b) by reason of multiple claims, the aggregate per occurrence limit of liability has been paid.\" (emphasis added)" }, { "page": "(b)(4)" } ], "opinion_index": 0 } ], "analysis": { "cardinality": 614, "char_count": 13971, "ocr_confidence": 0.752, "pagerank": { "raw": 4.89950402824256e-08, "percentile": 0.30810000891943895 }, "sha256": "d826737427515a2e98e1e45cebe61ce75c1974c36e0fec6f709262f688d0f49a", "simhash": "1:4b40372e73b5bfd8", "word_count": 2178 }, "last_updated": "2023-07-14T20:23:21.020165+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Judges STEELMAN and ERVIN concur." ], "parties": [ "JAMES D. CREED, Plaintiff-Appellant v. BRETT A. SMITH and CAROLYN JEANETTE WYATT, Defendants-Appellees" ], "opinions": [ { "text": "McGEE, Judge.\nJames D. Creed (Plaintiff) filed a complaint against Brett A. Smith (Mr. Smith) and Carolyn Jeanette Wyatt (Defendants) on 30 November 2010 in Catawba County Superior Court. Plaintiff amended his complaint on 4 February 2011. Plaintiffs complaint alleged that Mr. Smith negligently caused a motor vehicle collision that occurred on 2 February 2008. Plaintiffs underinsured motorist (UIM) insurance carrier, Integon National Insurance Company (Integon), filed an answer on 8 April 2011. Plaintiffs employer\u2019s UIM insurance provider, Liberty Mutual Insurance Company (Liberty), filed an answer on 15 June 2011. Plaintiff filed a motion to compel arbitration between himself, Integon and Liberty on 29 June 2011. The trial court heard Plaintiffs motion on 1 August 2011, and entered an order denying Plaintiffs motion on 15 August 2011. Plaintiff appeals.\nI. Factual Background\nPlaintiff was driving a vehicle owned by his employer on \\2 February 2008 when he was involved in a collision with Mr. Smith. The record on appeal shows that Mr. Smith was insured under a $50,000.00 insurance policy from Nationwide Mutual Insurance Company (Nationwide). Plaintiff's employer held a $1,000,000.00 policy with Liberty that provided UIM coverage to Plaintiff because Plaintiff was operating the vehicle \u201cin the course and scope of his employment.\u201d Plaintiff additionally held a $50,000.00 UIM policy with Integon that was also in effect at the time of the accident.\nThe provisions of the Liberty UIM policy indicated that Liberty would pay UIM coverage if (1) \u201c[t]he limit of any applicable liability bonds or policies have been exhausted by payments of judgments or settlements; or\u201d (2) if \u201c[a] tentative settlement has been made between an \u2018insured\u2019 and the insurer\u201d of an underinsured vehicle, Liberty \u201c[has] been given prompt written notice of such tentative settlement[,]\u201d and Liberty \u201c[a]dvance[s] payment to the \u2018insured\u2019 in an amount equal to the tentative settlement within 30 days after receipt of notification.\u201d The Liberty UIM policy includes an exclusion provision that precludes coverage for \u201c[a]ny claim settled by the \u2018insured\u2019 or any legal representative of the \u2018insured\u2019 without [Liberty\u2019s] consent.\u201d This exclusion does not apply, however, to settlements reached in compliance with the provision requiring notice and advance payment.\nFinally, Liberty\u2019s UIM policy includes an arbitration provision governing when the insured may demand arbitration. The policy states that if Liberty and the insured (1) \u201cdisagree whether the \u2018insured\u2019 is legally entitled to recover damages from the owner or driver of an \u2018uninsured motor vehicle,\u2019 \u201d or (2) \u201cdo not agree as to the amount of damages that are recoverable by that \u2018insured,\u2019 then matter may be arbitrated.\u201d The insured may demand arbitration, and if the insured decides not to arbitrate, \u201c[Liberty\u2019s] liability will be determined only in an action against [Liberty].\u201d\nIntegon\u2019s UIM policy is substantively the same as Liberty\u2019s UIM policy as it pertains to the present case. Integon\u2019s UIM policy states that Integon will pay UIM coverage \u201conly after the limits of liability under any applicable liability bonds or policies have been exhausted by payments of judgments or settlements,\u201d unless Integon is (1) \u201cgiven written notice in advance of settlement between an insured and the owner or operator of the underinsured vehicle[,]\u201d and (2) Integon \u201c[c]onsent[s] to advance payment to the insured in the amount equal to the tentative settlement.\u201d Integon\u2019s exclusion provision precludes UIM coverage if the insured settles a claim against the underinsured driver without consent from Integon. However, the exclusion does not apply if the underinsured motorist and the liability insurer reach a settlement following written notice to Integon and Integon does not \u201cadvance payment to the insured in an amount equal to the tentative settlement within thirty days[.]\u201d Integon\u2019s UIM policy also includes an arbitration provision which states if Integon and the insured disagree on \u201c[w]hether that insured is legally entitled to recover compensatory damages from the owner or driver of an uninsured motor vehicle or underinsured motor vehicle [,]\u201d or \u201c[a]s to the amount of such damages],]\u201d the insured may demand arbitration.\nDefendants\u2019 counsel notified Plaintiff\u2019s counsel on 26 April 2011 that Nationwide had tendered its liability limits of $50,000.00 in return for a covenant not to enforce judgment with Plaintiff. Plaintiff\u2019s counsel notified Liberty and Integon of the tender on 12 May 2011. Six days later, on 18 May 2011, Plaintiff requested binding arbitration with Liberty and Integon. Liberty advanced $50,000.00 to Plaintiff's counsel on 9 June 2011 to preserve its subrogation rights, and Plaintiff\u2019s counsel returned Nationwide\u2019s $50,000.00 payment. Plaintiff filed his \u201cmotion to compel binding arbitration and stay further proceedings\u201d on 29 June 2011. The trial court denied Plaintiff\u2019s motion on 15 August 2011, finding that the UIM policies were not applicable because the liability insurer\u2019s policy had not been \u201cexhausted\u201d under N.C. Gen. Stat. \u00a7 20\u2014279.21.\nII.Issue on Anneal\nThe sole issue raised on appeal is whether the trial court erred by denying Plaintiff\u2019s motion to compel arbitration on the basis of a determination that Nationwide\u2019s liability insurance limits had not been \u201cexhausted\u201d for the purposes of N.C. Gen. Stat \u00a7 20-279.21 and the UIM insurance policies of Liberty and Integon.\nIII.Standard of Review\nWe consider de novo the issue of whether Plaintiff\u2019s motion to compel arbitration was properly dismissed. See Raspet v. Buck, 147 N.C. App. 133, 136, 554 S.E.2d 676, 678 (2001) (\u201c[A] trial court\u2019s conclusion as to whether a particular dispute is subject to arbitration is a conclusion of law, reviewable de novo by the appellate court.\u201d); see also Register v. White, 358 N.C. 691, 693, 599 S.E.2d 549, 552 (2004) (\u201cQuestions concerning the meaning of contractual provisions in an insurance policy are reviewed de novo on appeal.\u201d).\nIV.Exhaustion of Liability Insurance\nPlaintiff argues that the trial court erred by denying his motion to compel arbitration. Plaintiff contends that Nationwide\u2019s liability insurance was exhausted on 26 April 2011, meaning that Liberty\u2019s and Integon\u2019s UIM coverage was applicable when Plaintiff requested binding arbitration. Upon review of the relevant law, we find that Nationwide\u2019s liability insurance was exhausted on 26 April 2011, and that the trial court improperly dismissed Plaintiff\u2019s motion to compel arbitration.\nN.C. Gen. Stat. \u00a7 20-279.21(b)(4) states the following:\nUnderinsured motorist coverage is deemed to apply when, by reason of payment of judgment or settlement, all liability bonds or insurance policies providing coverage for bodily injury caused by the ownership, maintenance, or use of the underinsured highway vehicle have been exhausted. Exhaustion of that liability coverage for the purpose of any single liability claim presented for underinsured motorist coverage is deemed to occur when either (a) the limits of liability per claim have been paid upon the claim, or (b) by reason of multiple claims, the aggregate per occurrence limit of liability has been paid.\nN.C. Gen. Stat. \u00a7 20-279.21(b)(4) (2011). In Register, our Supreme Court unambiguously interpreted N.C. Gen. Stat. \u00a7 20-279.21(b)(4) to mean that \u201c[e]xhaustion occurs when [a] liability carrier has tendered the limits of its policy in a settlement offer or in satisfaction of a judgment.\u201d Register, 358 N.C. at 698, 599 S.E.2d at 555. In considering the meaning of the word \u201ctender,\u201d this Court has previously relied upon Black\u2019s Law Dictionary, which defines \u201ctender\u201d as \u201c[a]n unconditional offer of money or performance to satisfy a debt or obligation[.]\u201d Black\u2019s Law Dictionary 1479 (7th ed. 1999); see also Morrison v. Public Serv. Co. of N.C., 182 N.C. App. 707, 710-11, 643 S.E.2d 58, 61-62 (2007).\nFurther, the record on appeal in Register shows that our Supreme Court intended to indicate that exhaustion occurs upon tender, rather than upon payment, of a liability insurer\u2019s policy limit. In Register, the Supreme Court indicated that the \u201cliability carrier, State Farm, tendered its liability limits of $50,000.00 on 8 August 2001.\u201d Register, 358 N.C. at 692, 599 S.E.2d at 551. Then, \u201c[i]n a letter to Farm Bureau dated 24 September 2001, plaintiff demanded arbitration pursuant to the UIM provision in Mr. Register\u2019s insurance policy.\u201d Id. From a review of the record in Register, it appears that actual payment by the liability insurer did not occur until at least 8 October 2001, when the plaintiff signed a \u201cSettlement Agreement and Covenant Not To Enforce Judgment,\u201d which was \u201c[f]or and in consideration of the sum of $50,000.00, the receipt of which [thereby was] acknowledged.\u201d Nonetheless, the trial court found that \u201cplaintiff\u2019s right to demand arbitration of her UIM claim could not have arisen prior to 8 August 2001, when defendant White\u2019s insurance company tendered the full limits of its policy[,]\u201d meaning that the \u201cplaintiff\u2019s 24 September 2001 demand for arbitration fell within the three-year \u2018time-limit\u2019 referenced in the policy[.]\u201d Register, 358 N.C. at 701, 599 S.E.2d at 556. Had the Supreme Court in Register held that exhaustion had occurred upon payment of the liability policy rather than tender, the plaintiff\u2019s 24 September 2001 demand for arbitration would have occurred before exhaustion and would have been untimely.\nWe are bound by our Supreme Court\u2019s interpretation of N.C. Gen. Stat. \u00a7 20-279.21(b)(4) and we therefore hold that the limits of Nationwide\u2019s liability policy were exhausted on 26 April 2011, when Nationwide tendered payment of $50,000.00 to Plaintiff. Accordingly, Plaintiff\u2019s 18 May 2011 written request for binding arbitration occurred at a time when Plaintiff\u2019s right to UIM arbitration was available under both N.C. Gen. Stat. \u00a7 20-279.21 and under the terms of Liberty\u2019s and Integon\u2019s UIM policies.\nV. Commitment to Follow Supreme Court Interpretation\nDefendants correctly point out that our Supreme Court has interpreted \u201cexhaustion\u201d differently in previous decisions. See Brown v. Lumbermens Mut. Casualty Co., 326 N.C. 387, 396, 390 S.E.2d 150, 155 (1990) (finding that if an insurer \u201cmerely tenders its limits without obtaining a settlement of any claim for its insured, a strong argument can be made that it has neither \u2018exhausted\u2019 its policy limits nor fulfilled its fiduciary duty to discharge its policy obligations[.]\u201d). Defendants also assert that the plain language of N.C. Gen. Stat. \u00a7 20-279.21(b)(4) uses the word \u201cpaid\u201d rather than \u201ctendered\u201d to define when exhaustion occurs for the purpose of determining when UIM insurance policies apply. See N.C. Gen. Stat. \u00a7 20-279.21(b)(4) (\u201cExhaustion ... is deemed to occur when either (a) the limits of the liability per claim have been paid upon the claim, or (b) by reason of multiple claims, the aggregate per occurrence limit of liability has been paid.\u201d (emphasis added)).\nNonetheless, a straightforward application of the Supreme Court\u2019s unambiguous language in Register clearly demonstrates that N.C. Gen. Stat. \u00a7 20-279.21(b)(4) should be interpreted to mean that \u201c[e]xhaustion occurs when [a] liability carrier has tendered the limits of its policy in a settlement offer or in satisfaction of a judgment.\u201d Register, 358 N.C. at 698, 599 S.E.2d at 555. \u201c[I]t is not our prerogative to overrule or ignore clearly written decisions of our Supreme Court.\u201d Kinlaw v. Long Mfg., 40 N.C. App. 641, 643, 253 S.E.2d 629, 630, rev\u2019d on other grounds, 298 N.C. 494, 259 S.E.2d 552 (1979); see also Bray v. N.C. Dep\u2019t of Crime Control and Pub. Safety, 151 N.C. App. 281, 285, 564 S.E.2d 910, 913 (2002) (holding that it is not the prerogative of the North Carolina Court of Appeals to reconsider the North Carolina Supreme Court\u2019s application of a gross negligence standard for an officer in pursuit) (citations omitted).\nFinding that Nationwide\u2019s policy was exhausted at the time of Plaintiff\u2019s request for binding arbitration, this Court need not consider the additional issues presented by Plaintiff. In accordance with the UIM polices and N.C. Gen. Stat. \u00a7 20-279.21, exhaustion of Nationwide\u2019s liability policy allowed plaintiff to \u201cmake a written demand for arbitration\u201d to resolve a disagreement with the UIM insurers over Plaintiff\u2019s legal entitlement to recover or the amount of damages recoverable. We find, therefore, that the trial court erred by denying Plaintiff\u2019s motion to compel arbitration.\nReversed.\nJudges STEELMAN and ERVIN concur.", "type": "majority", "author": "McGEE, Judge." } ], "attorneys": [ "Patterson Harkavy LLP, by Burton Craige and Narendra K. Ghosh; and Ramsay Law Firm,, P.A., by Martha L. Ramsay, for Plaintiff-Appellant.", "Davis and Hamrick, L.L.P., by H. Lee Davis, Jr.; and Frazier, Hill & Fury, R.L.L.P., by Torin Lane Fury, for Unnamed Defendants-Appellees Liberty Mutual Insurance Company and Integon National Insurance Company.", "Brown, Moore & Associates, PLLC, by Jon R. Moore; and White & Stradley, LLP, by J. David Stradley, for North Carolina Advocates for Justice, amicus curiae.", "McAngus, Goudelock & Courie, PLLG, by JohnP Barringer and Jeffrey B. Kuykendal, for North Carolina Association of Defense Attorneys, amicus curiae." ], "corrections": "", "head_matter": "JAMES D. CREED, Plaintiff-Appellant v. BRETT A. SMITH and CAROLYN JEANETTE WYATT, Defendants-Appellees\nNo. COA11-1469\n(Filed 21 August 2012)\nInsurance \u2014 exhaustion of liability limits \u2014 tender rather than payment \u2014 motion to compel arbitration\nThe trial court erred by denying plaintiff\u2019s motion to compel arbitration in an action arising from an automobile accident where the issue was whether Nationwide\u2019s (the insurer of the other driver) liability insurance was exhausted when plaintiff requested arbitration. Exhaustion occurs upon tender rather than payment.\nAppeal by Plaintiff from order entered by Judge Timothy S. Kincaid in Superior Court, Catawba County. Heard in the Court of Appeals 22 May 2012.\nPatterson Harkavy LLP, by Burton Craige and Narendra K. Ghosh; and Ramsay Law Firm,, P.A., by Martha L. Ramsay, for Plaintiff-Appellant.\nDavis and Hamrick, L.L.P., by H. Lee Davis, Jr.; and Frazier, Hill & Fury, R.L.L.P., by Torin Lane Fury, for Unnamed Defendants-Appellees Liberty Mutual Insurance Company and Integon National Insurance Company.\nBrown, Moore & Associates, PLLC, by Jon R. Moore; and White & Stradley, LLP, by J. David Stradley, for North Carolina Advocates for Justice, amicus curiae.\nMcAngus, Goudelock & Courie, PLLG, by JohnP Barringer and Jeffrey B. Kuykendal, for North Carolina Association of Defense Attorneys, amicus curiae." }, "file_name": "0330-01", "first_page_order": 340, "last_page_order": 346 }