IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA16-1078
Filed: 1 August 2017
Guilford County, No. 15CVS7639
PLUM PROPERTIES, LLC, Plaintiff,
v.
NORTH CAROLINA FARM BUREAU MUTUAL INSURANCE COMPANY, INC.,
SABAHETA SELAK, MATEJ SELAK aka Matek Selak, DELISA L. SPARKS aka
Delisa L. Thompson aka Delisa L. Tucker, JEREMY TUCKER, Defendants.
Appeal by plaintiff from order entered 14 June 2016 by Judge Susan E. Bray
in Guilford County Superior Court. Heard in the Court of Appeals 5 April 2017.
Gregory A. Wendling for plaintiff-appellant.
Pinto Coates Kyre & Bowers, PLLC, by Deborah J. Bowers, for defendant-
appellee.
BERGER, Judge.
Plum Properties, LLC (“Plaintiff”) appeals the June 14, 2016 order granting
Defendants’ motion for summary judgment on Plaintiff’s declaratory judgment
action. Plaintiff argues that summary judgment was improper because there
remain genuine issues of material fact concerning ambiguities in insurance policies
issued by North Carolina Farm Bureau Mutual Insurance Company, Inc.
(“Defendant Insurance Company”; insurance company and its insureds, collectively,
“Defendants”) that may entitle Plaintiff to relief. We disagree.
PLUM PROPS., LLC V. N.C. FARM BUREAU MUT. INS. CO.
Opinion of the Court
Factual & Procedural Background
This declaratory judgment action arose from an underlying claim brought by
Plaintiff against Defendants, including M. Selak and J. Tucker (collectively “minor
insureds”), for allegedly vandalizing and breaking into properties owned by
Plaintiff.
During the late night and early morning hours between November 5 and 21,
2010, Plaintiff claims that the minor insureds vandalized four houses on Orville
Drive in High Point, North Carolina (“Properties”) which are owned or managed by
Plaintiff. The vandalism allegedly occurred on three separate occasions, causing
approximately $58,000.00 in damages. In addition to the claims made against the
minor insureds for “intentionally, willfully and maliciously” damaging and
destroying the Properties, Plaintiff also brought claims against Sabaheta Selak, the
mother of M. Selak, and Delisa Sparks, the mother of J. Tucker (collectively “parent
insureds”), for negligence and negligent supervision of their minor children.
The parent insureds have homeowners’ insurance policies issued through
Defendant Insurance Company (“Policies”) that were in effect for the period during
which the damage occurred. The Policies, for each parent insured, contain the same
relevant provisions for purposes of determining whether coverage exists for the
damage caused by the minor insureds.
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Opinion of the Court
Section II(A) of the Policies controls the extent of coverage for personal
liability claims brought against persons insured under the Policies. Section II(A)
covers, in relevant part, all claims “brought against an ‘insured’ for damages
because of . . . ‘property damage’ caused by an ‘occurrence’.” The definitions section
of the Policies defines “insured” to include relatives of the policy holder who reside
in the policy holder’s household. “Occurrence” is defined as “an accident, including
continuous or repeated exposure to substantially the same general harmful
conditions” which results in property damage. Where Section II(A) applies, the
Policies will pay up to the Policies’ respective liability limits for any damages for
which an insured is legally liable.
The Policies also contain specific exclusion clauses to the personal liability
coverage. Under Section II(E), coverage of Section II(A) is excluded where the
property damage that occurs “is intended or may be reasonably expected to result
from the intentional acts or omissions or criminal acts or omissions of one or more
‘insured’ persons.” This exclusion applies regardless of whether the insured is
charged with or convicted of a crime.
On July 29, 2015, Plaintiff brought this declaratory judgment action against
Defendant Insurance Company seeking a declaration that the alleged damages
arising out of the underlying claim are covered under the Policies issued by
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Opinion of the Court
Defendant Insurance Company. Defendant Insurance Company filed motions for
dismissal and summary judgment on February 11, 2016.
In an order filed June 14, 2016, the trial court granted Defendant Insurance
Company’s motion for summary judgment on the declaratory judgment action
concluding that the damages sustained by Plaintiff were excluded from the
insurance coverage of the Policies. It is from this order that Plaintiff timely
appeals.
Analysis
Summary judgment exists to eliminate the need for a trial “when the only
questions involved are questions of law.” Ellis v. Williams, 319 N.C. 413, 415, 355
S.E.2d 479, 481 (1987) (citations omitted). Under Rule 56 of the North Carolina
Rules of Civil Procedure, “summary judgment . . . is . . . based on two underlying
questions of law,” Id. (citations omitted), and may be granted when: (1) there are no
genuine issues of material fact and (2) any party is entitled to judgment as a matter
of law. N.C. Gen. Stat. § 1A-1, Rule 56(c) (2015). Alleged errors in the application
of law are subject to de novo review on appeal. Falk Integrated Tech., Inc. v. Stack,
132 N.C. App. 807, 809, 513 S.E.2d 572, 574 (1999). “On appeal, review of summary
judgment is . . . limited to whether the trial court’s conclusions as to these [two]
questions of law were correct ones.” Ellis, 319 N.C. at 415, 355 S.E.2d at 481.
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An issue is deemed “ ‘genuine’ if it can be proven by substantial evidence[,]
and a fact is ‘material’ ” where it constitutes or establishes a material element of the
claim. Lowe v. Bradford, 305 N.C. 366, 369, 289 S.E.2d 363, 366 (1982) (citation
omitted). In determining that there are no genuine issues of material fact, “[i]t is
not the trial court’s role to resolve conflicts in the evidence.” Wallen v. Riverside
Sports Ctr., 173 N.C. App. 408, 413, 618 S.E.2d 858, 862 (2005) (citation omitted).
Rather, the court’s role is only to determine whether such issues exist. Id. (citation
omitted). Furthermore, in considering whether a genuine issue of material fact
exists, “the court must view the evidence in the light most favorable to the
nonmovant.” Id. at 410, 618 S.E.2d at 858, 860-61 (citation omitted).
The North Carolina Supreme Court instructed in Harleysville Mut. In. Co. v.
Buzz Off Insect Shield, L.L.C. that when the language of an insurance policy and
the contents of a complaint are undisputed, we review de novo whether the insurer
has a duty to defend its insured against the complaint’s allegations. 364 N.C. 1, 6,
692 S.E.2d 605, 610 (2010). To make this determination, our courts apply the
“comparison test” which requires that the insured’s policy and the complaint be
read side-by-side to determine whether the events alleged are covered or excluded
by the policy. Id. In applying this test, “the question is not whether some
interpretation of the facts as alleged could possibly bring the injury within the
coverage provided by the insurance policy”; but rather, “assuming the facts as
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alleged to be true, whether the insurance policy covers that injury.” Id. at 364 N.C.
at 7, 692 S.E.2d at 611.
Where an insurance policy’s language is clear and unambiguous, our courts
will enforce the policy as written. N.C. Farm Bureau Mut. Ins. Co. v. Mizell, 138
N.C. App. 530, 532, 530 S.E.2d 93, 95 (2000). When interpreting the language of a
policy, non-technical words are given their ordinary meaning unless the evidence
shows that the parties intended the words to have a specific technical meaning. Id.
at 532-33, 530 S.E.2d at 95. Ambiguous policy language, by comparison, is subject to
judicial construction. Id. at 532, 530 S.E.2d at 95.
However, our courts “must enforce the [policy] as the parties have made it
and may not, under the guise of interpreting an ambiguous provision, remake the
[policy] and impose liability upon the [insurance] company which it did not assume
and for which the policyholder did not pay.” Wachovia Bank and Trust Co. v.
Westchester Fire Ins. Co., 276 N.C. 348, 354, 172 S.E.2d 518, 522 (1970). When
interpreting provisions of an insurance policy, provisions that extend coverage are
to be construed liberally to “provide coverage, whenever possible by reasonable
construction.” State Capital Ins. Co. v. Nationwide Mut. Ins. Co., 318 N.C. 534, 538,
350 S.E.2d 66, 68 (1986).
In the Policies at issue here, personal liability coverage extended to cover
claims brought against an insured for property damage resulting from an
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“occurrence.” An occurrence is described by the Polices as “an accident.” Our
Supreme Court has previously interpreted what constitutes an occurrence within
the context of a insurance policy issued by Defendant Insurance Company
containing the same operational definition of “occurrence” as is contained within the
Policies. Waste Mgmt. of Carolinas, Inc. v. Peerless Ins. Co., 315 N.C. 688, 694, 340
S.E.2d 374, 379 (1986). Based on the nontechnical definition of “accident,” the
Court described an “occurrence” as being limited to events that are not “expected or
intended from the point of view of the insured.” Id. at 696, 340 S.E.2d at 380.
While acknowledging that “it is possible to perceive ambiguity” in determining the
type of events that constitute an accident, the Court noted that under a
commonsense reading of the language “it strains logic to do so.” Id. at 695, 340
S.E.2d at 379. Accordingly, where the potentially damaging effects of an insured’s
intentional actions can be anticipated by the insured, there is no “occurrence.” Id.,
340 S.E.2d at 380.
In the present case, Plaintiff contends that summary judgment was improper
because there is ambiguity in the Policies’ language as to what constitutes an
occurrence. Relying largely on the deposition of Phillip Todd Childers, a Claims
Director for Defendant Insurance Company, Plaintiff argues that because there are
“occasions when there are shades of gray” in determining whether an event should
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qualify as an occurrence, that there is a genuine issue of material fact as to whether
the damage caused by the minor insureds should be covered under the Policies.
As noted above in Harleysville Mutual Insurance, the question properly
raised by the trial court is not whether some interpretation of the facts could
possibly bring Plaintiff’s injury within the coverage of the Policies but whether the
facts, as alleged in the complaint and taken as true, are enough to bring the injury
within the Policies’ coverage. It strains logic to conjure ambiguity into the Policies’
language as applied to the facts at hand. The damages arising from the alleged
vandalism of the Properties by the minor insureds do not qualify as unexpected or
unintended from the viewpoint of the minor insureds. See American Mfrs. Mut. Ins.
Co. v. Morgan, 147 N.C. App. 438, 442, 556 S.E.2d 25, 28 (2001) (holding that
intentional actions that are reasonably certain to result in injury will not qualify as
an accident for purposes of insurance coverage).
Plaintiff further contends that summary judgment was improper because the
parent insureds, who themselves are alleged of negligence and negligent
supervision in the underlying case, did not intend that the minor insureds vandalize
the Properties. Thus, the vandalism should qualify as an occurrence as applied to
the parent insureds. But this attenuation of the nexus between Plaintiff’s injury
and the mechanism causing the damage is not sufficient to create a genuine issue of
material fact as to whether intentional destructive actions qualify as an occurrence
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covered by the Policies. Section II(A) of the Policies cannot be read to cover
intentional damage knowingly caused by insureds, which severally would not
qualify as an occurrence, merely because the damages inflicted were not intended
by other insureds covered by the Policies. The parent insureds neither purchased,
nor did Defendant Insurance Company provide, coverage to protect against the
intentional destructive acts of their children. Therefore, the actions that caused
Plaintiff’s damages did not fall within the coverage of the Policies.
While coverage clauses, such as Section II(A), are interpreted broadly,
exclusionary clauses, such as Section II(E), are construed narrowly against the
insurer in favor of coverage for the insured. State Capital Ins. Co., 318 N.C. at 543-
44, 350 S.E.2d at 71. However, as previously noted, where no ambiguity exists, an
insurance policy must be enforced as written. Mizell, 138 N.C. App. at 532, 530
S.E.2d at 95.
In the present Policies, Section II(E) specifically excludes from coverage any
property damage that “is intended or may be reasonably expected to result from the
intentional acts or omissions . . . of one or more ‘insured’ persons.” Thus, even if
Section II(A) included insurance coverage for the minor insureds’ alleged acts of
vandalism resulting from the negligence or negligent supervision of the parent
insureds, summary judgment would again be proper because Section II(E) excludes
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coverage for damages that occur as the reasonably expected result of an insureds’
intentional acts.
As children of policyholders residing in the policyholders’ households, both M.
Selak and J. Tucker qualify as insured persons covered by the Policies. Accordingly,
because the alleged damage to Plaintiff’s Properties occurred due to these minor
insureds’ intentional, willful, and malicious acts, the damage is excluded from
coverage under the Policies by Section II(E).
Under the Policies, the intentional acts by the minor insureds that allegedly
damaged Plaintiff’s properties do not qualify as an ‘occurrence’ because the damage
was not accidental, and are, therefore, not covered by the Policies’ personal liability
coverage. Furthermore, intentional acts of the minor insureds are specifically
excluded from coverage by Section II(E) of the Policies. Accordingly, the damages
allegedly caused by the minor insureds were not covered by the parent insureds’
Defendant Insurance Company Policies.
Conclusion
The language of the Policies issued by Defendant Insurance Company both
intentionally omitted and specifically excluded liability coverage for damages
caused by the intentional, malicious acts of the insureds. Thus, there were no
genuine issues of material fact and the trial court did not err in granting
Defendants’ motion for summary judgment because Defendants were entitled to
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judgment as a matter of law. We therefore affirm the trial court’s determination
that Plaintiff’s damages, allegedly caused by the actions of the insureds, are not
covered by the Defendant Insurance Company Policies issued to the individual
Defendants.
AFFIRMED.
Judges ELMORE and INMAN concur.
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