Opinion
No. COA12–566.
2013-02-5
The ESTATE OF Matthew BRIDGES, by and through the Administrator of his Estate J. Thomas HUNN, Plaintiff, v. NORTH CAROLINA FARM BUREAU MUTUAL INSURANCE COMPANY, INC., Defendant.
The Bumgardner Law Firm, by Thomas D. Bumgardner, for plaintiff-appellant. Young Moore and Henderson P.A., by Walter E. Brock, Jr. and Andrew P. Flynt, and Caudle & Spears, P.A., by Harold Craig Spears, for defendant-appellee.
Appeal by plaintiff from order entered 31 January 2012 by Judge Steve A. Balog in Gaston County Superior Court. Heard in the Court of Appeals 27 November 2012. The Bumgardner Law Firm, by Thomas D. Bumgardner, for plaintiff-appellant. Young Moore and Henderson P.A., by Walter E. Brock, Jr. and Andrew P. Flynt, and Caudle & Spears, P.A., by Harold Craig Spears, for defendant-appellee.
HUNTER, ROBERT C., Judge.
The Estate of Matthew Joseph Bridges (“plaintiff” or “Matthew's Estate”) appeals from an order entered 31 January 2012 granting North Carolina Farm Bureau Mutual Insurance Company, Inc.'s (“defendant's”) motion to dismiss and, in the alternative and independent of that ruling, granting summary judgment in favor of defendant. After careful review, we affirm the trial court's order granting defendant's motion to dismiss.
Background
Matthew Bridges (“Matthew”) and Brittany Bridges (“Brittany”) were husband and wife, and they owned a home in Gastonia located at 1117 Jannee Court. In August 2008, they were separated, and Brittany was living with her mother Tammy Wright (“Ms.Wright”) along with Kyndall Bridges (“Kyndall”), Brittany and Matthew's three-year-old child. On or about 24 August 2008, Matthew asked Brittany to come to his house. Brittany did and found Matthew highly intoxicated. While showing his firearm to Brittany, Matthew allegedly “accidentally discharged the firearm,” and Brittany died. Matthew then killed himself.
At the time of the incident, Matthew and Brittany had a homeowner's insurance policy (“homeowner's policy”), policy no. HP 5896019, with defendant. They were both listed as named insureds on the policy. Specific provisions of the homeowner's policy will be discussed as they relate to plaintiff's arguments on appeal.
On 15 June 2010, The Estate of Brittany Bridges, by the administratrix of her estate Tammy Bridges, (“Brittany's Estate”) filed a complaint against Matthew's Estate seeking to recover damages for the wrongful death of Brittany caused by Matthew's negligence. The administrator of Matthew's Estate, J. Thomas Hunn (“Mr.Hunn”), sent a copy of the complaint to defendant. On 21 June 2010, defendant responded by letter to plaintiff stating that it would not provide a defense to the lawsuit nor would it pay any judgment entered against plaintiff because the homeowner's policy excluded any coverage for claims of bodily injury brought by named insureds. Defendant sent an additional letter restating its contention that the wrongful death claim was excluded from coverage.
Matthew's Estate never responded to the complaint filed by Brittany's Estate. Brittany's Estate filed a motion for entry of default. The clerk of Gaston County Superior Court entered the entry of default. Brittany's Estate filed a motion for default judgment, which was granted by the trial court on 25 February 2011. The trial court entered judgment for Brittany's Estate and awarded it $5,444,000 in compensatory damages.
On 23 May 2011, Matthew's Estate filed a complaint against defendant seeking a declaratory judgment compelling defendant to pay the benefits of insurance coverage, including the full amount of the judgment entered against it. Matthew's Estate asserted additional claims against defendant including breach of contract, tortious breach of contract and bad faith, and unfair and deceptive practices.
On 5 August 2011, defendant filed a motion to dismiss for failure to state a claim upon which relief may be granted. Specifically, defendant alleged that it had no duty to defend or indemnify Matthew's Estate because the homeowner's policy excluded liability coverage for Brittany's death because Brittany was a named insured on the policy. Matthew's Estate filed a motion for summary judgment on 11 October 2011.
Both matters came on for hearing on 17 January 2012. The trial court granted defendant's motion to dismiss and dismissed plaintiff's complaint with prejudice. In addition, the trial court ordered that “[i]n the alternative and independent of the prior ruling, summary judgment is hereby granted in favor of the [d]efendant as the non-moving party pursuant to Rule 56(c) of the North Carolina Rules of Civil Procedure” and denied plaintiff's motion for summary judgment.
On 13 February 2012, plaintiff filed its notice of appeal.
Arguments
Plaintiff first argues that the trial court erred in granting defendant's motion to dismiss because the complaint stated a valid cause of action under North Carolina's Declaratory Judgment Act. We disagree.
Generally, when the pleadings establish that an alleged injury is covered by an insurance policy, the insurer has a duty to defend. Kubit v. MAG Mut. Ins. Co., 210 N.C.App. 273, ––––, 708 S.E.2d 138, 144 (2011). However, “[a]n insurer is excused from its duty to defend only ‘if the facts are not even arguably covered by the policy.’ “ Id. (quoting Waste Mgmt. of Carolinas, Inc. v. Peerless Ins. Co., 315 N.C. 688, 692, 340 S.E.2d 374, 378 (1986)). Generally, declaratory judgment actions are brought by the insurer seeking to establish whether an alleged injury falls within policy coverage. Here, plaintiff, the insured, brought this declaratory judgment action seeking the declaration that defendant had the legal duty to defend and indemnify it. Thus, the issue is whether the homeowner's policy provided personal liability coverage for plaintiff with regard to the claim brought by Brittany's Estate.
When determining whether to grant a motion to dismiss on a declaratory judgment action, this Court has stated:
A motion to dismiss for failure to state a claim is seldom appropriate in actions for declaratory judgments, and will not be allowed simply because the plaintiff may not be able to prevail. The motion is allowed only when there is no basis for declaratory relief, as when the complaint does not allege an actual, genuine existing controversy. A claim for declaratory relief is sufficient if the complaint alleges the existence of a real controversy arising out of the parties' opposing contentions and respective legal rights under a deed, will or contract in writing.
Morris v. Plyler Paper Stock Co., Inc., 89 N.C.App. 555, 557, 366 S.E.2d 556, 558 (1988) (internal quotation marks and citations omitted).
“When included in an insurance contract, exclusionary clauses are to be strictly construed in favor of coverage. However, if such exclusions are plainly expressed, ‘insurers are entitled to have them construed and enforced as expressed.’ “ State Auto. Mut. Ins. Co. v. Hoyle, 106 N.C.App. 199, 201–02, 415 S.E.2d 764, 765–66 (internal quotation marks and citations omitted), disc. review denied, 331 N.C. 557, 417 S.E.2d 803 (1992).
Here, the homeowner's policy, which was attached to defendant's motion to dismiss, lists both Matthew and Brittany as named insureds. Under Section II, Coverage E for personal liability, the policy states that:
If a claim is made or a suit is brought against an “insured” for damages because of “bodily injury” or “property damage” caused by an “occurrence,” to which this coverage applies, we will:
1. Pay up to our limit of liability for the damages for which an “insured” is legally liable[;] ... and
2. Provide a defense at our expense by counsel of our choice, even if the suit is groundless, false or fraudulent.
In the same section under “Exclusions,” the policy specifically states that there is no coverage for personal liability for “ ‘[b]odily injury’ to you or an ‘insured’ as defined under Definitions 5.a. or b.” “You” and “your” are defined as the “ ‘named insured’ shown in the Declarations and the spouse if a resident of the same household.” In other words, an individual may be a “you” because they are either: (1) a named insured, or (2) a spouse living the same household. An “insured” means “[y]ou and residents of your household who are: (1) Your relatives; or (2) Other persons under the age of 21 and in the care of any person named above.” Thus, the term “insured” includes: (1) “you” (defined as a named insured or a spouse living in the same household); (2) residents of your household who are relatives; and (3) residents who are under age 21 and in your care. “Bodily injury” is defined as “bodily harm, sickness or disease, including required care, loss of services and death that results.”
Here, the exclusion provision in the homeowner's policy is clear and unambiguous, and it excludes personal liability coverage for bodily injuries to a named insured. Brittany was a named insured under the policy. Thus, the exclusion precludes personal liability coverage for claims brought as a result of her death. It should be noted that Brittany's status as a “you” is not based on the fact that she was Matthew's spouse since, at the time of the incident, Brittany was not a resident of Matthew's house. Therefore, Matthew's Estate had no personal liability coverage since the claim was based on bodily injury to named insured Brittany.
Moreover, it should be noted that this Court has already interpreted an almost identical exclusion clause and concluded it precludes coverage for a named insured in N.C. Farm Bureau Mut. Ins. Co. v. Fowler, 162 N.C.App. 100, 589 S.E.2d 911 (2004). In Fowler, Adam Fowler got into an argument with his wife, Cheryl, at their marital residence. Id. at 101, 589 S.E.2d at 912. During the argument, Adam injured Cheryl, causing her to “suffer severe head injuries.” Id. Cheryl's parents, both individually and as Cheryl's guardians, filed an action against Adam seeking recovery for her injuries. Id. at 101–02, 589 S.E.2d at 912. The trial court entered a judgment for Cheryl in the amount of $997,760 based on Adam's negligence for failure to seek timely medical care. Id. at 102, 589 S.E.2d at 912. The insurance company, who had issued a homeowner's policy to the Fowlers, sought a declaratory judgment to determine whether the policy provided coverage for Adam's acts. Id. The trial court granted summary judgment in favor of the insurer, id., and this Court affirmed. Id. at 105, 589 S.E.2d at 914. In interpreting almost identical policy language, this Court held that “the language of the exclusion is clear and unambiguous. It states plainly and succinctly that Coverage E, Personal Liability, does not apply to a ‘named insured’ or ‘insured.’ “ Id. at 104, 589 S.E.2d at 914. Since Cheryl was a named insured and insured under the policy, “[t]here was thus no coverage under the policy for the injuries received by Cheryl Fowler[.]” Id. at 104, 589 S.E.2d at 914.
Based on this Court's holding in Fowler, any possible ambiguity in the policy exclusion has already been resolved, and this Court is bound by that decision. In re Civil Penalty, 324 N.C. 373, 384, 379 S.E.2d 30, 37 (1989). Here, the facts alleged in the complaint fall squarely within the exclusion clause of the homeowner's policy. Therefore, defendant was excused from its duty to defend and indemnify plaintiff because Brittany's death is not even “arguably covered by the policy.” Kubit, 210 N.C.App. at ––––, 708 S.E.2d at 144. Thus, the trial court did not err in granting defendant's motion to dismiss because there was no basis for plaintiff's requested declaratory relief due to Fowler's interpretation of the plain and unambiguous language in the exclusion provision.
Next, plaintiff puts forth two arguments in support of its contention that the trial court erred in granting summary judgment. First, plaintiff alleges that defendant had a duty to investigate and defend the claim brought by Brittany's Estate because Kyndall was the real party in interest, and her claim was not excluded from coverage because she was not a “resident” of Matthew's household. In support of its argument, plaintiff cites Waste Mgmt. and Kubit.
Second, plaintiff argues that the severability clause in the policy would allow the Court to treat each “named insured” separately and apply the exclusion provision individually as for whom coverage is sought. Thus, the severability clause would limit exclusion of coverage only to the insured claiming coverage. In other words, under plaintiff's argument, the severability clause would create a separate policy for each named insured. Brittany would not be a named insured on Matthew's policy; thus, the exclusion clause would not preclude coverage for Brittany's death under Matthew's policy. Under this argument, Matthew would not receive coverage for bodily injuries if he tried to recover from himself, but he would receive coverage if Brittany, another named insured, sought to recover for injuries inflicted by him.
Because we concluded that the trial court's granting of defendant's motion to dismiss was proper, we need not address whether the trial court's granting of summary judgment in favor of defendant, in the alternative, was proper nor plaintiff's arguments contained therein.
Conclusion
Because the language of the exclusion clause is clear and unambiguous and based on this Court's holding in Fowler, we affirm the trial court's order granting defendant's motion to dismiss.
AFFIRMED. Judges McGEE and ELMORE concur.
Report per Rule 30(e).