Ennis v. Haswell

IN THE COURT OF APPEALS OF NORTH CAROLINA

No. COA23-534

Filed 16 January 2024

Chatham County, No. 18 CVS 269

PAUL ENNIS, as Guardian ad Litem of T.F.G., II, a Minor, Plaintiff,

v.

ALEXANDER HASWELL, RONALD HASWELL, JR., and BETTY HASWELL,
Defendants,

v.

NORTH CAROLINA FARM BUREAU MUTUAL INSURANCE COMPANY, INC.,
Intervenor.

Appeal by intervenor from order entered 12 December 2022 by Judge James

M. Webb in Chatham County Superior Court. Heard in the Court of Appeals 31

October 2023.

White & Stradley, PLLC, by J. David Stradley, and Brian D. Westrom for
plaintiff-appellee.

No brief filed for defendants-appellees.

Young, Moore, and Henderson, P.A., by Walter E. Brock, Jr., and Matthew C.
Burke, for intervenor-appellant.

ZACHARY, Judge.

Intervenor North Carolina Farm Bureau Mutual Insurance Company, Inc.,

(“Farm Bureau”) appeals from the trial court’s order denying its motion to enforce its

right of subrogation, in which Farm Bureau sought reimbursement of its $100,000
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Opinion of the Court

underinsured motorist (“UIM”) coverage payment to Plaintiff from the proceeds of

Plaintiff’s settlement with Defendants. After careful review, we affirm.

I. Background

On 19 February 2016, T.F.G., II, (“T.F.G.”) was severely injured while riding

as a passenger in a vehicle operated by Defendant Alexander Haswell and owned by

Alexander’s parents, Defendants Ronald Haswell, Jr., and Betty Haswell. There is no

dispute regarding the relevant insurance policies’ coverage at the time of the incident.

As the trial court found in its order:

5. At the time of the Accident, Defendants were insured by
an auto liability insurance policy issued by Nationwide
General Insurance Company (“Nationwide”) with limits of
$300,000 per person and $300,000 per accident. This policy
also provided [UIM] coverage in the amount of $300,000
per person and $300,000 per accident. The Nationwide
policy provided UIM coverage for [T.F.G.], as a passenger
in an insured vehicle, in the amount of $300,000 per person
and $300,000 per accident.

6. At the time of the Accident, [T.F.G.] was an insured
under a motor vehicle liability insurance policy issued by
[Farm Bureau]. The Farm Bureau policy provided UIM
coverage for [T.F.G.] with a limit of $100,000 per person.

On 16 March 2018, Plaintiff’s counsel1 sent a letter to Nationwide, demanding

that Nationwide tender its policy limit within 30 days. Nationwide did not respond

to this demand. Consequently, on 26 April 2018, Plaintiff, acting on T.F.G.’s behalf

1 On 26 April 2018, the trial court granted Plaintiff Paul Ennis’s motion to be appointed
T.F.G.’s guardian ad litem, as T.F.G. was a minor child without general or testamentary guardian.

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Opinion of the Court

as his guardian ad litem, filed suit against Defendants in Chatham County Superior

Court. In the complaint, Plaintiff alleged negligence by Defendant Alexander

Haswell, and the vicarious liability of Defendants Ronald and Betty Haswell

pursuant to the family purpose vehicle doctrine.

On 2 May 2018, Plaintiff’s counsel notified Farm Bureau that (1) Nationwide

had not responded to the time-limited demand, (2) Plaintiff had filed suit against

Defendants, and (3) Farm Bureau had the right to participate in the litigation as an

unnamed party.

On 9 May 2018, Plaintiff’s counsel stated to defense counsel that Plaintiff

“would not accept $300,000 from Nationwide at this point in time in settlement on

behalf of . . . Defendants.” On 24 May and 8 June 2018, Nationwide served Plaintiff

with offers of judgment in the amount of $300,000 on Defendants’ behalf. Plaintiff’s

counsel sent a copy of the 8 June offer of judgment to Farm Bureau on 14 June 2018,

but Farm Bureau did not advance the amount of Nationwide’s tender. Plaintiff did

not accept the offer of judgment, and the litigation continued.

A month later, on 20 July 2018, Farm Bureau offered to pay Plaintiff $100,000

pursuant to its UIM coverage. Plaintiff accepted this offer, and by consent order

entered on 28 January 2019, the trial court approved the parties’ settlement of the

Farm Bureau UIM claim. Farm Bureau “reserv[ed] any and all rights, if any, it may

have to recover its payments from the tortfeasor, and acknowledg[ed] that

[Defendants] contend that these rights have been waived.”

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Opinion of the Court

On 23 September 2022, Plaintiff and Defendants participated in court-ordered

mediation, which culminated in an agreement to settle for an amount in excess of

$300,000. That same day, Plaintiff’s counsel notified Farm Bureau via email of the

settlement agreement and suggested that Farm Bureau could “choose to advance to

secure its subrogation rights.” On 12 October 2022, Farm Bureau declined to advance

the amount of the settlement agreement.

On 26 October 2022, Farm Bureau filed (1) a motion to intervene in the action

and (2) a motion to enforce its subrogation right, pursuant to N.C. Gen. Stat. § 20-

279.21(b)(4) (2021). The matter came on for hearing on 31 October 2022.

After entering a sealed order approving the confidential settlement, the trial

court heard Farm Bureau’s motions. The trial court granted Farm Bureau’s motion

to intervene without objection from the other parties. On 12 December 2022, the trial

court entered an order denying Farm Bureau’s motion to enforce its subrogation

right. Farm Bureau timely filed notice of appeal.

II. Discussion

This case involves the interpretation of N.C. Gen. Stat. § 20-279.21(b)(4): in

sum, the question presented is whether Farm Bureau was required to advance to

Plaintiff the amount of the liability settlement offer in order to preserve its

subrogation claim against the proceeds of any recovery from the tortfeasor.

Farm Bureau argues that, because it paid its UIM policy limit before the

liability insurer exhausted its policy limits, pursuant to § 20-279.21(b)(4), “Farm

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Opinion of the Court

Bureau became subrogated to the extent of that payment and therefore earned the

right to reimbursement of its $100,000 payment from any money that Plaintiff

recovered from the owner or operator of the underinsured vehicle or their liability

insurer.” Plaintiff, on the other hand, contends that the plain text of § 20-279.21(b)(4)

is clear—if a UIM insurer “wishes to preserve its subrogation rights against the

tortfeasor, it must advance a payment to the insured in the amount of the tentative

settlement with a liability insurer within 30 days of the date it receives notice of the

offer. If it does not, it loses all subrogation rights.” For the reasons that follow, we

agree with Plaintiff.

A. Standard of Review

The question presented is purely a matter of law. “Answering this question

primarily involves interpretation of the Motor Vehicle Safety and Financial

Responsibility Act of 1953 (commonly referred to as the ‘FRA’), and examination of

the terms of Farm Bureau’s motor vehicle insurance policy, each a question of law.”

Lunsford v. Mills, 367 N.C. 618, 622–23, 766 S.E.2d 297, 301 (2014) (citation omitted).

“This Court reviews questions of law de novo, meaning that we consider the matter

anew and freely substitute our judgment for the judgment of the lower court.” Id. at

623, 766 S.E.2d at 301.

B. Analysis

“According to well-established North Carolina law, the intent of the

Legislature controls the interpretation of a statute.” C Invs. 2, LLC v. Auger, 383 N.C.

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Opinion of the Court

1, 8, 881 S.E.2d 270, 276 (2022) (citation omitted). “The avowed purpose of the [FRA],

of which [N.C. Gen. Stat.] § 20-279.21(b)(4) is a part, is to compensate the innocent

victims of financially irresponsible motorists. It is a remedial statute to be liberally

construed so that the beneficial purpose intended by its enactment may be

accomplished.” Sutton v. Aetna Cas. & Sur. Co., 325 N.C. 259, 265, 382 S.E.2d 759,

763 (citations omitted), reh’g denied, 325 N.C. 437, 384 S.E.2d 546 (1989).

One portion of N.C. Gen. Stat. § 20-279.21(b)(4) addresses a UIM insurer’s

right to subrogation:

An underinsured motorist insurer may at its option, upon a
claim pursuant to underinsured motorist coverage, pay
moneys without there having first been an exhaustion of the
liability insurance policy covering the ownership, use, and
maintenance of the underinsured highway vehicle. In the
event of payment, the underinsured motorist insurer shall
be either: (a) entitled to receive by assignment from the
claimant any right or (b) subrogated to the claimant’s right
regarding any claim the claimant has or had against the
owner, operator, or maintainer of the underinsured
highway vehicle, provided that the amount of the insurer’s
right by subrogation or assignment shall not exceed
payments made to the claimant by the insurer. No insurer
shall exercise any right of subrogation or any right to
approve settlement with the original owner, operator, or
maintainer of the underinsured highway vehicle under a
policy providing coverage against an underinsured
motorist where the insurer has been provided with written
notice before a settlement between its insured and the
underinsured motorist and the insurer fails to advance a
payment to the insured in an amount equal to the tentative
settlement within 30 days following receipt of that notice.

N.C. Gen. Stat. § 20-279.21(b)(4) (emphases added).

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Opinion of the Court

Farm Bureau contends that this section of the statute creates two kinds of

subrogation rights, differentiated by whether the UIM insurer pays a claim before

the insured exhausts the tortfeasor’s liability insurance coverage or after the

exhaustion of coverage. According to Farm Bureau, if a UIM insurer elects to make a

pre-exhaustion payment, as it did in the instant case, the insurer “become[s]

subrogated to the claimant’s rights against the tortfeasor, to the extent of [the

insurer’s] payment.” Notably, Farm Bureau only cites the first two sentences of the

above-quoted portion of § 20-279.21(b)(4) to support this “type of subrogation”; Farm

Bureau’s citation ends before the sentence limiting “any right of subrogation . . .

where the insurer has been provided with written notice before a settlement between

its insured and the underinsured motorist and the insurer fails to advance a payment

to the insured in an amount equal to the tentative settlement within 30 days[.]” Id.

(emphasis added).

In Farm Bureau’s view, the omitted, limiting language of § 20-279.21(b)(4)

solely applies to the other “type of subrogation” that Farm Bureau identifies: a post-

exhaustion payment. In the event of a post-exhaustion payment, Farm Bureau

asserts that the UIM insurer may either appear and defend the action or “advance”

the amount of settlement. Thus, according to Farm Bureau, by applying the statutory

limits from this “separate portion” of § 20-279.21(b)(4), the trial court erroneously

“engrafted an inapplicable requirement on Farm Bureau’s subrogation right and

effectively ruled that Farm Bureau had no subrogation right whatsoever.”

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Opinion of the Court

Farm Bureau’s argument is unpersuasive for several reasons. To begin, there

is no ambiguity in the plain language of § 20-279.21(b)(4). “Where the language of a

statute is clear and unambiguous, there is no room for judicial construction and the

courts must give the statute its plain and definite meaning, and are without power

to interpolate, or superimpose, provisions and limitations not contained therein.” C

Invs. 2, 383 N.C. at 8, 881 S.E.2d at 276 (cleaned up). Section 20-279.21(b)(4) plainly

states:

No insurer shall exercise any right of subrogation . . . where
the insurer has been provided with written notice before a
settlement between its insured and the underinsured
motorist and the insurer fails to advance a payment to the
insured in an amount equal to the tentative settlement
within 30 days following receipt of that notice.

N.C. Gen. Stat. § 20-279.21(b)(4) (emphases added).

The language used by our General Assembly in this subsection is “clear and

unambiguous” and thus, we “are without power to interpolate, or superimpose,

provisions and limitations not contained” within its text. C Invs. 2, 383 N.C. at 8, 881

S.E.2d at 276 (citation omitted); see also Haarhuis v. Cheek, 261 N.C. App. 358, 366,

820 S.E.2d 844, 851 (2018) (“This language is clear and unambiguous, and we are not

at liberty to divine a different meaning through other methods of judicial

construction.” (cleaned up)), disc. review denied, 372 N.C. 298, 826 S.E.2d 698 (2019).

Consequently, it matters not whether there are “two different types of statutory

subrogation rights[,]” as Farm Bureau contemplates. In that Farm Bureau “fail[ed]

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Opinion of the Court

to advance a payment to the insured in an amount equal to the tentative settlement

within 30 days following receipt of that notice[,]” Farm Bureau is not entitled to

“exercise any right of subrogation”—regardless of whether that right of subrogation

arises from a pre-exhaustion payment. N.C. Gen. Stat. § 20-279.21(b)(4) (emphasis

added).

Moreover, Farm Bureau misplaces its reliance on Farm Bureau Insurance Co.

of North Carolina v. Blong, 159 N.C. App. 365, 583 S.E.2d 307, disc. review denied,

357 N.C. 578, 589 S.E.2d 125 (2003), and Tutterow v. Hall, 283 N.C. App. 314, 872

S.E.2d 171 (2022), petition for disc. review dismissed and cert. denied, 384 N.C. 33,

883 S.E.2d 475 (2023).

Farm Bureau cites Blong for the proposition that Farm Bureau “was not

required to advance [payment] in order to preserve its subrogation right.” However,

Blong stands for no such proposition. After quoting the section of the Farm Bureau

UIM policy at issue in Blong—with its provision that subrogation rights do not apply

“if we have been given written notice in advance of a settlement and fail to advance

payment in an amount equal to the tentative settlement within 30 days following

receipt of such notice”—this Court noted that “[t]he contingency in the latter

provision has not been alleged, therefore no impediment from the policy exists.” 159

N.C. App. at 372, 583 S.E.2d at 311. Blong is simply inapplicable to the dispositive

issue in the present case.

Similarly inapplicable is Tutterow, in which we held that “[t]he trial court

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Opinion of the Court

properly determined that [N.C. Gen. Stat. § 20-279.21(b)(4)] is inapplicable” in that

“the UIM carriers had no duty to advance any payments because they owed nothing

under their policies”; the amounts of the liability policies’ coverage and the UIM

coverage were equal, and therefore, there was no UIM obligation. 283 N.C. App. at

320, 872 S.E.2d at 176.

In light of our conclusion that no distinction exists between pre-exhaustion and

post-exhaustion payments under § 20-279.21(b)(4), we need not address Farm

Bureau’s argument that “there had been no exhaustion of [Defendants’] liability

insurance policy” at the time that Farm Bureau paid its $100,000. Farm Bureau’s

position is based on the premise that Plaintiff “had expressly rejected the tender of

policy limits and stated [an] intent to continue to reject settlement offers for the

liability insurer’s policy limits.” This argument has been repeatedly rejected by this

Court:

Both the statute and case law require a UIM insurer be
notified when a settlement offer is made, and when the
primary liability insurance carrier has offered the limits of
its policy in settlement, as was done in this case, the
insurer must advance that amount to the insured within
30 days to protect its subrogation rights. Neither the
statute nor case law require that the settlement be
completed or that the UIM carrier must have notice of its
insured’s acceptance of the offer.

Daughtry v. Castleberry, 123 N.C. App. 671, 675, 474 S.E.2d 137, 140 (1996), aff’d,

346 N.C. 272, 485 S.E.2d 45 (1997). Accordingly, under Daughtry, the only

requirement to trigger the 30-day deadline is an offer, and the insured’s response—

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Opinion of the Court

whether known or unknown to the UIM insurer—is immaterial.

We acknowledge the public policy concerns advanced by Farm Bureau.

However, this Court is “an error-correcting body, not a policy-making or law-making

one.” Shearin v. Brown, 276 N.C. App. 8, 14, 854 S.E.2d 443, 448 (2021) (citation

omitted). Our role “is not to speculate about the consequences of the language the

legislature chose; we interpret that language according to its plain meaning and if

the result is unintended, the legislature will clarify the statute.” Wake Radiology

Diagnostic Imaging LLC v. N.C. Dep’t of Health & Hum. Servs., 279 N.C. App. 673,

681, 866 S.E.2d 489, 495 (2021) (cleaned up). Accordingly, although we decline to

address Farm Bureau’s policy arguments, the arguments are preserved should Farm

Bureau seek further review.

III. Conclusion

For the foregoing reasons, the trial court’s order is affirmed.

AFFIRMED.

Judges STADING and THOMPSON concur.

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