Summary
In Brinley's, the insurer relied on information outside the complaint to show that an employee was a "leased" employee such that a policy exclusion applied.
Summary of this case from Cont'l Cas. Co. v. Amerisure Ins. Co.Opinion
No. COA12–276.
2013-02-5
NATIONWIDE PROPERTY & CASUALTY INSURANCE COMPANY, Plaintiff, v. BRINLEY'S GRADING SERVICE, INC., Ismael Dominguez, Thomas E. Brinley, Sr., and Donna W. Taft, Administratrix of the Estate of Michael Wayne Paul, Jr., Defendants.
Bailey & Dixon, L.L.P., by David S. Coats and Philip A. Collins, for plaintiff-appellee. Smyth & Cioffi, LLP, by Theodore B. Smyth; and Wilson & Ratledge, PLLC, by James E.R. Ratledge, for defendants-appellants Brinley's Grading Service, Inc., and Thomas E. Brinley, Sr.
Appeal by defendants from order entered 2 December 2011 by Judge Shannon R. Joseph in Wake County Superior Court. Heard in the Court of Appeals 11 September 2012. Bailey & Dixon, L.L.P., by David S. Coats and Philip A. Collins, for plaintiff-appellee. Smyth & Cioffi, LLP, by Theodore B. Smyth; and Wilson & Ratledge, PLLC, by James E.R. Ratledge, for defendants-appellants Brinley's Grading Service, Inc., and Thomas E. Brinley, Sr.
Abrams & Abrams, P.A., by Douglas B. Abrams, Margaret S. Abrams, and Noah B. Abrams; and Taft, Taft & Haigler, P.A., by Thomas F. Taft, for defendant-appellant Donna W. Taft, Administratrix of the Estate of Michael Wayne Paul, Jr.
GEER, Judge.
This appeal involves a dispute over plaintiff Nationwide Property & Casualty Insurance Company's duty to defend and duty to provide coverage with respect to a wrongful death action (“the underlying action”) brought by Donna W. Taft, as administratrix of the estate of Michael Wayne Paul, Jr., against Brinley's Grading Services, Inc., Thomas E. Brinley, Sr. (president of Brinley's Grading), and Ismael Dominguez (an employee of Brinley's Grading). Defendants in this action—Ms. Taft, Brinley's Grading, and Mr. Brinley—appeal from the trial court's order granting summary judgment to plaintiff Nationwide and concluding that Nationwide had no duty to defend Brinley's Grading and Mr. Brinley and had no duty to provide coverage for Ms. Taft's claims against Brinley's Grading, Mr. Brinley, and Mr. Dominguez.
Applying the controlling test for the duty to defend set out most recently in Harleysville Mut. Ins. Co. v. Buzz Off Insect Shield, L.L.C., 364 N.C. 1, 6, 692 S.E.2d 605, 610 (2010), we hold that the trial court erred in concluding Nationwide had no duty to defend Brinley's Grading and Mr. Brinley. With respect to the coverage issue, however, we hold that the trial court properly concluded that Nationwide's policy did not provide coverage for Ms. Taft's claims against Brinley's Grading or Mr. Dominguez. A genuine issue of material fact exists, however, as to coverage for the claims against Mr. Brinley. We, accordingly, affirm the trial court's order in part and reverse in part.
Facts
On 26 January 2010, following an accident resulting in Mr. Paul's death, Ms. Taft filed a wrongful death action against Brinley's Grading, Mr. Brinley, and Mr. Dominguez for negligence. In her complaint, Ms. Taft alleged that on 14 February 2008, Mr. Paul was an employee of Pro–Tech Management & Equipment Services, Inc. and was doing work for Brinley's Grading pursuant to a contract between Pro–Tech and Brinley's Grading. The Taft complaint further alleged that at approximately 7:23 a.m. on 14 February 2008, Mr. Paul was bent over beside a large commercial trailer when Mr. Dominguez, an employee of Brinley's Grading, attempted to start a pickup truck. The truck lurched forward and struck Mr. Paul, and Mr. Paul died of his injuries. According to the Taft complaint, Mr. Dominguez immediately fled the scene and has not returned to North Carolina.
On 31 March 2010, Nationwide filed this action against Brinley's Grading, Mr. Dominguez, Mr. Brinley, and Ms. Taft. On 4 March 2011, Nationwide amended its complaint. In its amended complaint, Nationwide alleged that Brinley's Grading was the named insured under a business automobile policy issued by Nationwide (“the Policy”). Nationwide sought a declaration that it had no duty to make any payment to any of the defendants, to the estate of Mr. Paul, or to any beneficiaries or heirs for any settlement, verdict, or judgment entered in the underlying action brought by Ms. Taft or any other proceeding arising out of the events described in the underlying action's complaint. Nationwide further sought a declaration that it had no duty to defend Brinley's Grading, Mr. Brinley, or Mr. Dominguez in the underlying action.
The Policy contained the following provisions regarding coverage:
SECTION II—LIABILITY COVERAGE
A. Coverage
We will pay all sums an “Insured” legally must pay as damages because of “bodily injury” or “property damage” to which this insurance applies, caused by an “accident” and resulting from the ownership, maintenance or use of a covered “auto”.
....
We have the right and duty to defend any “insured” against a “suit” asking for such damages.... However, we have no duty to defend any “insured” against a “suit” seeking damages for “bodily injury” ... to which this insurance does not apply....
1. Who is An Insured
The following are “Insureds”:
a. You for any covered “auto”.
b. Anyone else while using with your permission a covered “auto” you own, hire or borrow[.]
....
c. Anyone liable for the conduct of an “Insured” described above but only to the extent of that liability.
“You,” as used in the Policy, referred to the “Named Insureds” shown in the Policy's declarations. The schedule of Named Insureds in the Policy's declarations included, among others, Brinley's Grading, Pro–Tech, and “Thomas & Marian Brinley Senior.”
Nationwide filed a motion for summary judgment on 8 September 2011 and an amended motion for summary judgment on 1 November 2011 contending that no coverage or duty to defend existed as to the underlying action because Ms. Taft's claims fell within various exclusions set out in the Policy. On 2 December 2011, the trial court entered an order granting Nationwide's amended motion for summary judgment as to all defendants.
The order provided that Nationwide “has no duty to defend Brinley's Grading Service, Inc., Thomas E. Brinley, Sr., or Ismael Dominguez for any claims asserted in the Underlying Action.” The order further provided:
2. Plaintiff [Nationwide] has no duty or obligation under Business Auto Policy ... (“the Policy”) to make any payment to Defendant Donna W. Taft, Administratrix of the Estate of Michael Wayne Paul, Jr. for the claims asserted in a wrongful death action commenced in Pitt County, North Carolina, Superior Court captioned Donna W. Taft, Administratrix of the Estate of Michael Wayne Paul, Jr., Plaintiff, v. Brinley's Grading Services, Inc., Ismael Dominguez, and Thomas E. Brinley, Sr., bearing docket number 10 CVS 224 (the “Underlying Action”)[.]
Brinley's Grading, Mr. Brinley, and Ms. Taft each timely appealed to this Court.
Discussion
“In reviewing the propriety of summary judgment, the appellate court is restricted to assessing the record before it.” Waste Mgmt. of Carolinas, Inc. v. Peerless Ins. Co., 315 N.C. 688, 690, 340 S.E.2d 374, 377 (1986). “If on the basis of that record it is clear that no genuine issue of material fact existed and that the movant was entitled to judgment as a matter of law, summary judgment was appropriately granted.” Id.
I. Duty to Defend Brinley's Grading and Mr. Brinley
Our Supreme Court has explained that, “[g]enerally speaking, the insurer's duty to defend the insured is broader than its obligation to pay damages incurred by events covered by a particular policy.” Id. at 691, 340 S.E.2d at 377. “When the pleadings state facts demonstrating that the alleged injury is covered by the policy, then the insurer has a duty to defend, whether or not the insured is ultimately liable.” Id. An insurer is excused from its duty to defend only “if the facts are not even arguably covered by the policy.” Id. at 692, 340 S.E.2d at 378.
In order to answer the question whether an insurer has a duty to defend, our courts apply the “ ‘comparison test,’ reading the policies and the complaint ‘side-by-side ... to determine whether the events as alleged are covered or excluded.’ “ Harleysville, 364 N.C. at 6, 692 S.E.2d at 610 (quoting Waste Mgmt., 315 N.C. at 693, 340 S.E.2d at 378). To apply this test, “the facts as alleged in the complaint are to be taken as true and compared to the language of the insurance policy. If the insurance policy provides coverage for the facts as alleged, then the insurer has a duty to defend.” Id. at 7, 692 S.E.2d at 611.
Our Supreme Court has further explained regarding the nature of the duty to defend:
In addressing the duty to defend, 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; the question is, assuming the facts as alleged to be true, whether the insurance policy covers that injury. The manner in which the duty to defend is “broader” than the duty to indemnify is that the statements of fact upon which the duty to defend is based may not, in reality, be true. As we observed in Waste Management, “[w]hen the pleadings state facts demonstrating that the alleged injury is covered by the policy, then the insurer has a duty to defend, whether or not the insured is ultimately liable.” [Waste Mgmt., 315 N.C. at 691, 340 S.E.2d at 377] (emphasis added) (citations omitted).
Id.
Thus, “[u]nder Harleysville, the duty to defend is broader than the duty to indemnify only ‘in the sense that an unsubstantiated allegation requires an insurer to defend against it so long as the allegation is of a covered injury; however, even a meritorious allegation cannot obligate an insurer to defend if the alleged injury is not within, or is excluded from, the coverage provided by the insurance policy.’ “ Kubit v. MAG Mut. Ins. Co., 210N.C.App. 273, ––––, 708 S.E.2d 138, 145 (2011) (quoting Harleysville, 364 N.C. at 7, 692 S.E.2d at 611).
Regarding Brinley's Grading, Nationwide argues it had no duty to defend the company because the facts alleged in the underlying complaint, if true, fall within the Policy's “Employee Indemnification And Employer's Liability” exclusion. That exclusion provides:
This insurance does not apply to any of the following:
....
4. Employee Indemnification And Employer's Liability
“Bodily injury” to:
a. An “employee” of the “insured” arising out of and in the course of:
(1) Employment by the “insured”; or
(2) Performing the duties related to the conduct of the “insured's” business; or
b. The spouse, child, parent, brother or sister of that “employee” as a consequence of Paragraph a. above.
This exclusion applies:
(1) Whether the “insured” may be liable as an employer or in any other capacity; and
(2) To any obligation to share damages with or repay someone else who must pay damages because of the injury.
The parties do not dispute that Brinley's Grading is an “insured .” The parties do dispute, however, whether the Taft complaint alleges that Mr. Paul was an “employee” of Brinley's Grading. The Policy contains the following relevant definitions:
F. “Employee” includes a “leased worker”. “Employee” does not include a “temporary worker”.
....
I. “Leased worker” means a person leased to you by a labor leasing firm under an agreement between you and the labor leasing firm, to perform duties related to the conduct of your business. “Leased worker” does not include a “temporary worker”.
....
O. “Temporary worker” means a person who is furnished to you to substitute for a permanent “employee” on leave or to meet seasonal or short-term workload conditions.
In pertinent part, the underlying complaint alleges the following:
9. On or about February 14, 2008, Michael Wayne Paul, Jr., was an employee of Pro–Tech Management & Equipment Services, Inc. Mr. Paul was working at a facility located at 819 Ellis Road, Durham, Durham County, North Carolina, for the Defendant Brinley's Grading Service, Inc., pursuant to a contract between Pro–Tech Management & Equipment Services and the Defendant Brinley's Grading Services, Inc.
10. Prior to February 14, 2008, Pro–Tech Management & Equipment Services, Inc. had entered into a written agreement with Defendant Brinley's Grading Service, Inc. which specified that employees of Pro–Tech Management & Equipment Services, Inc. were at all times independent contractors and that they remained the sole employees of Pro–Tech Management & Equipment Services, Inc.
11. At no time was Michael Wayne Paul, Jr. an employee of the Defendant Brinley's Grading Services, Inc.
Nationwide argues that it is undisputed that (1) “at the time of the accident Paul was leased to Brinley's Grading pursuant to an agreement between Brinley's Grading and Pro–Tech to perform duties related to the conduct of Brinley's Grading's business and was performing said duties when the accident occurred”; (2) Pro–Tech is a labor leasing firm that leased employees to Brinley's Grading and other entities; and (3) at the time of the accident, Mr. Paul had been working for Brinley's Grading for seven years “and, therefore, did not qualify as a ‘temporary worker’ as that term is defined in the Policy.” Because the “facts” recited by Nationwide are not alleged in the Taft complaint, they are beside the point. See Harleysville, 364 N.C. at 6, 692 S.E.2d at 610 (holding that appellate courts look only at language of insurance policies and allegations of complaint in deciding duty to defend).
The allegation in the underlying complaint that Mr. Paul was “working ... for the Defendant Brinley's Grading Service, Inc., pursuant to a contract between Pro–Tech Management & Equipment Services and the Defendant Brinley's Grading Services, Inc.” is not sufficient to establish the applicability of the exclusion because the complaint goes further and alleges aspects of the “contract” which, if true, would bring the claims outside of the exclusion.
The complaint alleges that pursuant to the contract: (1) Pro–Tech employees were independent contractors; (2) Pro–Tech employees were solely employees of Pro–Tech (a company not identified in the complaint as a labor leasing firm); and (3) at no time was Mr. Paul an employee of Brinley's Grading. These allegations, if true, would permit a finding that Mr. Paul was not necessarily a “leased worker”—“a person leased to you by a labor leasing firm under an agreement between you and the labor leasing firm, to perform duties related to the conduct of your business”—because they do not necessarily establish that Pro–Tech was a labor leasing firm or that Mr. Paul was “leased” to Brinley's Grading.
As an “independent contractor,” Mr. Paul may not have been leased but, instead, may have been engaged solely in work for Pro–Tech and only subject to the control of Brinley's Grading regarding the result of the work. See Coastal Plains Utils., Inc. v. New Hanover Cnty., 166 N.C.App. 333, 345, 601 S.E.2d 915, 923 (2004) (“An independent contractor ... is one who exercises an independent employment and contracts to do certain work according to his own judgment and method, without being subject to his employer except as to the result of his work.” (internal quotation marks omitted)).
We cannot say, based on the allegations of the complaint, that Mr. Paul was a leased employee as defined by the Policy. Therefore, Nationwide has failed to show that the allegations of the underlying complaint are “not even arguably covered by the policy” given this exclusion. Waste Mgmt., 315 N.C. at 692, 340 S.E.2d at 378.
Nationwide argues, however: “If it is Defendant–Appellants' position that Nationwide has a duty to defend in this instance because the leasing agreement was not attached to the Underlying Wrongful Death Complaint or the terms of the agreement were not enumerated in the Complaint, such a position would be contrary to well established law.” Nationwide then quotes 1 Allan D. Windt, Insurance Claims & Disputes: Representation of Insurance Companies and Insureds § 4.4, at 83 (5th ed.2007) in support of its position:
[A]n insurer should not have a duty to defend an insured when the facts alleged in the complaint ostensibly bring the case within the policy's coverage, but other facts that are not reflected in the complaint and are unrelated to the merits of the plaintiff's action plainly take the case outside the policy coverage.
Nationwide's argument disregards the established law in our State. Under the controlling comparison test, our courts simply compare the policy language with the facts alleged in the complaint; in deciding that a duty to defend does not exist, they do not examine evidence to determine whether the actual facts underlying the complaint fall within the coverage of the policy. See Harleysville, 364 N.C. at 6, 692 S.E.2d at 610. Although Nationwide indicates that the Windt treatise cites numerous cases from other jurisdictions, we are bound by our Supreme Court's holdings.
Consequently, we hold that the “Employee Indemnification And Employer's Liability” exclusion does not defeat Nationwide's duty to defend. Nationwide does not point to any other basis for concluding that it had no duty to defend Brinley's Grading and, therefore, the trial court erred in granting Nationwide summary judgment on this claim.
Turning to Mr. Brinley, Nationwide contends that it had no duty to defend him because the facts alleged in the underlying complaint bring the claims against Mr. Brinley within the “Fellow Employee” exclusion. That exclusion provides:
This insurance does not apply to any of the following:
....
5. Fellow Employee
“Bodily injury” to any fellow “employee” of the “insured” arising out of and in the course of the fellow “employee's” employment or while performing duties related to the conduct of your business.
The “Fellow Employee” exclusion was modified by an “Endorsement” that added the following language to that exclusion:
This exclusion does not apply to an “insured” who occupies a position designated under “covered positions” below: COVERED POSITIONS:
Managers and Supervisors Only[.]
In order for the “Fellow Employee” exclusion to apply, both Mr. Brinley and Mr. Paul must have been “employee[s]” of Brinley's Grading within the meaning of the Policy. Because we have already concluded that the allegations of the complaint, if taken as true, fail to establish that Mr. Paul was an “employee” as defined by the Policy, this exclusion does not apply. Nationwide does not dispute that if the “Fellow Employee” exclusion is inapplicable, it had a duty to defend Mr. Brinley in the underlying action. We, therefore, hold that the trial court erred in concluding that Nationwide was not required to defend Mr. Brinley. We need not address the parties' remaining arguments regarding Nationwide's duty to defend Mr. Brinley.
In sum, we hold, based on a comparison of the allegations of the complaint with the terms of the Policy, that Nationwide has a duty to defend both Brinley's Grading and Mr. Brinley. We, therefore, reverse the order below and remand for entry of judgment in favor of Brinley's Grading and Mr. Brinley on Nationwide's claim that it had no duty to defend.
II. Coverage for Claims in Underlying Action
Ms. Taft argues on appeal that the trial court erred in granting summary judgment to Nationwide on the issue of liability coverage under the Policy for Ms. Taft's claims against Brinley's Grading and Mr. Dominguez in the underlying action because a genuine issue of material fact existed as to coverage for those claims. In addition, Ms. Taft and Mr. Brinley each contend that a genuine issue of material fact exists as to whether the Policy provided coverage for the claims against Mr. Brinley in the underlying action. We address each of these arguments in turn.
“Under North Carolina law, ‘the insured ... has the burden of bringing itself within the insuring language of the policy. Once it has been determined that the insuring language embraces the particular claim or injury, the burden then shifts to the insurer to prove that a policy exclusion excepts the particular injury from coverage.’ “ Kubit, 210 N.C.App. at ––––, 708 S.E.2d at 147 (quoting Hobson Constr. Co. v. Great Am. Ins. Co., 71 N.C.App. 586, 590, 322 S.E.2d 632, 635 (1984)). “ ‘Exclusionary clauses are interpreted narrowly while coverage clauses are interpreted broadly to provide the greatest possible protection to the insured.’ “ Id . at ––––,708 S.E.2d at 147 (quoting State Capital Ins. Co. v. Nationwide Mut. Ins. Co., 318 N.C. 534, 542–43, 350 S.E.2d 66, 71 (1986)).
“As with all contracts, the object of construing an insurance policy ‘is to arrive at the insurance coverage intended by the parties when the policy was issued.’ “ Harleysville, 364 N.C. at 9, 692 S.E.2d at 612 (quoting Wachovia Bank & Trust Co. v. Westchester Fire Ins. Co., 276 N.C. 348, 354, 172 S.E.2d 518, 522 (1970)). “If the parties have defined a term in the agreement, then we must ascribe to the term the meaning the parties intended.” Id. A. Failure to Serve Mr. Dominguez
As an initial matter, Ms. Taft contends that the trial court did not have personal jurisdiction over Mr. Dominguez because he was not served and, consequently, the trial court should have denied Nationwide's motion for summary judgment regarding Nationwide's liability for Ms. Taft's claims against Mr. Dominguez. Nationwide concedes that Mr. Dominguez “was not made a party to the [declaratory judgment] action.”
Despite the trial court's lack of jurisdiction over Mr. Dominguez, the trial court did have jurisdiction over Ms. Taft. It follows that the issue whether the Policy provided coverage for a judgment obtained by Ms. Taft against Mr. Dominguez could be adjudicated and be binding as to Ms. Taft. If Ms. Taft were to obtain a judgment against Mr. Dominguez in the underlying negligence action, that judgment could, under appropriate circumstances, be enforced against Nationwide without regard to whether Mr. Dominguez was made a party to the enforcement action.
Our Court has explained: “With regard to claims against an insured in which a default judgment is obtained in favor of the claimant, ‘if an insurer had a right to defend the injury action against the insured, had timely notice of such action, and defends or elects not to defend, the judgment, in the absence of fraud or collusion, is binding upon the insurer as to issues which were or might have been litigated therein.’ “ Naddeo v. Allstate Ins. Co ., 139 N.C.App. 311, 318, 533 S.E.2d 501, 506 (2000) (quoting Lee R. Russ & Thomas F. Segalla, Couch on Insurance 3d § 106:50 (1997)), overruled in part on other grounds as stated in Kubit v. MAG Mut. Ins. Co, 210 N.C.App. 273, 708 S.E.2d 138 (2011). A genuine controversy thus exists between Nationwide and Ms. Taft even in Mr. Dominguez' absence. See Nationwide Mut. Ins. Co. v. Aetna Cas. & Sur. Co., 1 N.C.App. 9, 12, 159 S.E.2d 268, 271 (1968) (“Questions involving the liability of an insurance company under its policy, in cases where a genuine controversy exists, are a proper subject for a declaratory judgment.”).
Furthermore, while Mr. Dominguez did have a right to service of process prior to the trial court exerting personal jurisdiction over him, Draughon v. Harnett Cnty. Bd. of Educ., 166 N.C.App. 449, 451, 602 S.E.2d 717, 718 (2004), his right to challenge personal jurisdiction of the trial court should be asserted or waived by Mr. Dominguez—not by Ms. Taft. See In re J.T. (I), J.T. (II), A.J., 363 N.C. 1, 4, 672 S.E.2d 17, 18 (2009) (“Objections to a court's exercise of personal (in personam) jurisdiction ... must be raised by the parties themselves and can be waived in a number of ways.”). The trial court was, therefore, entitled to decide whether coverage existed under the Policy for Ms. Taft's claims against Mr. Dominguez. B. Coverage for claims against Brinley's Grading and Mr. Dominguez
As with Nationwide's duty to defend claim, Nationwide similarly argues that there was no coverage for Ms. Taft's claims against Brinley's Grading under the Policy because of the “Employee Indemnification And Employer Liability” exclusion. In contrast to our duty to defend analysis, “in determining whether an insurer has a duty to indemnify, the facts as determined at trial are compared to the language of the insurance policy. If the insurance policy provides coverage for the facts as found by the trier of fact, then the insurer has a duty to indemnify.” Harleysville, 364 N.C. at 7, 692 S.E.2d at 611 (emphasis added). Since the trial court granted summary judgment on this issue, we must decide whether the evidence presented by the parties gives rise to a genuine issue of material fact regarding coverage under the policy.
To qualify as a “leased worker,” and therefore amount to an “employee” under the Policy, Mr. Paul must have been (1) leased to Brinley's Grading, (2) by a labor leasing firm, (3) under an agreement between Brinley's Grading and the labor leasing firm, (4) to perform duties related to the conduct of Brinley's Grading's business. Mr. Paul must also not have been a “temporary worker” as defined by the Policy.
There is no dispute that, at the time Mr. Paul was killed, he was performing work for Brinley's Grading pursuant to a contract between Brinley's Grading and Mr. Paul's employer, Pro–Tech, entitled “Employee Leasing Agreement.” Under the Employee Leasing Agreement, Pro–Tech “suppl[ied] Brinley's with personnel.” The Employee Leasing Agreement provided: “Brinley's shall pay Pro–Tech each month as set forth in Appendix 1 for each employee of Pro–Tech. Brinley's may issue a single check covering all leased employees.” These facts establish that Mr. Paul was leased to Brinley's Grading by Pro–Tech, a labor leasing firm, under an agreement between Brinley's Grading and Pro–Tech.
Regarding the fourth element, the Employee Leasing Agreement provided in part: “All work and services shall be performed by Pro–Tech employees at Brinley's premises or other work sites at the direction of Brinley's.” This evidence establishes that Mr. Paul was leased to Brinley's Grading in order to perform duties related to the conduct of Brinley's Grading's business.
Turning to whether Mr. Paul was a “temporary worker,” there is no dispute that, at the time of his death, Mr. Paul had been performing work for Brinley's Grading, pursuant to the Employee Leasing Agreement, for almost seven years. Accordingly, Mr. Paul was not a “temporary worker” as defined by the Policy.
Given these undisputed facts, the “Employee Indemnification And Employer's Liability” exclusion applies to Ms. Taft's claims against Brinley's Grading. Ms. Taft nonetheless argues that Mr. Paul is not an “employee” of Brinley's Grading because, under North Carolina case law, Mr. Paul amounted to an independent contractor while working for Brinley's Grading. Ms. Taft's argument is beside the point because it does not address the Policy's definition of “employee,” which includes a “leased worker.” The Policy's definitions control in determining whether coverage exists under the Policy.
Ms. Taft further argues that the exclusion, as applied in this case, is invalid under S.C. Ins. Co. v. Smith, 67 N.C.App. 632, 634, 313 S.E.2d 856, 859 (1984), in which this Court held “that G.S. 20–279.21(e) limits the operative effect of employee exclusion clauses in automobile liability policies required by the Financial Responsibility Act to the extent that an insurer may not exclude employees from policy coverage unless workers' compensation is available to those employees.” However, N.C. Gen.Stat. § 20–279.21(e) (2011) was amended, for policies issued after October 1, 1999 (including the Policy in this case), to limit its application to uninsured and underinsured motorist coverage: “Uninsured or underinsured motorist coverage that is provided as part of a motor vehicle liability policy shall insure that portion of a loss uncompensated by any workers' compensation law and the amount of an employer's lien determined pursuant to G.S. 97–10.2(h) or (j).” Because the exclusion at issue is not being applied with respect to uninsured or underinsured motorist coverage, N.C. Gen.Stat. § 20–279.21(e) and South Carolina Insurance Company are not applicable.
We, therefore, hold that no genuine issue of material fact exists, and the “Employee Indemnification And Employer Liability” exclusion applies to preclude coverage for Ms. Taft's claims against Brinley's Grading. The trial court, therefore, did not err in entering summary judgment for Nationwide on the issue of coverage for those claims.
With respect to Mr. Dominguez, Nationwide contends that coverage was excluded by the “Fellow Employee” exclusion. Because we have concluded that no genuine issue of material fact exists regarding whether Mr. Paul was an “employee” of Brinley's Grading as defined by the Policy and because there is no dispute that Mr. Dominguez was an “employee” of Brinley's Grading under the Policy, the evidence establishes that the “Fellow Employee” exclusion applies to also preclude coverage of the claims against Mr. Dominguez. Since the “Fellow Employee” exclusion applies, we need not address the parties' remaining arguments regarding the claims against Mr. Dominguez. C. Coverage for claims against Mr. Brinley
Although in the trial court, Nationwide argued several bases in support of its contention that the Policy did not provide coverage for the claims against Mr. Brinley, Nationwide argues on appeal only that summary judgment was proper because the “Fellow Employee” exclusion applied to the claims. While Nationwide established that Mr. Paul was an employee for purposes of the Policy, the issue remains whether Mr. Brinley amounted to a “Fellow Employee.”
The “Fellow Employee” exclusion contained an exception for “[m]anagers and [s] upervisors.” Nationwide argues that the record contains no genuine issue of material fact as to whether the exception applies to Mr. Brinley, president of Brinley's Grading, because the record “reveal[s] that Thomas Brinley had already transferred his managerial responsibilities to his sons when the accident occurred.” Nationwide more specifically contends that because Mr. Brinley had a visual disability that restricted his role in the company to “ ‘administrative’ duties in the office such as ‘reviewing documents and contracts' with the aid of a reader” and because Mr. Brinley's sons “oversaw the projects and made all the personnel decisions,” the exception for managers and supervisors is inapplicable.
Our review of the record reveals a genuine issue of material fact regarding the applicability of the exception for managers and supervisors. Mr. Brinley testified that he has a degenerative eye disease that limits his duties as president of Brinley's Grading. Accordingly, at the time Mr. Paul was killed, Mr. Brinley was in the process of transferring control of the company to his sons, Chad and Robby, the company's vice presidents. While Mr. Brinley did testify that the majority of his work consisted of reviewing contracts and other documents, he also testified that he handled equipment replacement and repair and the company's finances. For example, Chad and Robby were expected to get approval from Mr. Brinley for purchases exceeding $10,000. Mr. Brinley testified that Chad and Robby did all the “hiring and firing” at the time Mr. Paul was killed, but that he still had the power to fire an employee as well. On the morning of Mr. Paul's death, Mr. Brinley was called out to the site of the accident and given a report by Chad.
The terms “manager” and “supervisor” are not defined in the Policy. In construing the language of insurance policies, “[w]e supply undefined, ‘nontechnical words ... a meaning consistent with the sense in which they are used in ordinary speech, unless the context clearly requires otherwise.’ “ Harleysville, 364 N.C. at 9, 692 S.E.2d at 612. (quoting Wachovia, 276 N.C. at 354, 172 S.E.2d at 522). Our Court has previously explained that “[a] ‘manager’ is one who ‘conducts, directs, or supervises something.’ “ Miller v. B.H.B. Enters., Inc., 152 N.C.App. 532, 539–40, 568 S.E.2d 219, 225 (2002) (quoting Webster's Third New Int'l Dictionary 1372 (1968)). See also Webster's Third New Int'l Dictionary 1372 (1968) (defining “manage,” in part, as “to control and direct” and “to direct or carry on business or affairs”). Similarly, a “supervisor” is “one that supervises a person, group, department, organization, or operation,” “such a person having authority delegated by an employer to hire, transfer, suspend, recall, promote, assign, or discharge another employee or to recommend such action[.]” Id. at 2296. See also id. (defining “supervise,” in part, as “to look over, inspect, oversee”).
The evidence that Mr. Brinley, who remained president of the company, oversaw and controlled equipment replacement and repair and the company's finances; that Chad and Robby were required to obtain authorization from Mr. Brinley for purchases over a certain dollar amount; and that Mr. Brinley could fire another employee was evidence from which the jury could reasonably determine that Mr. Brinley was a manager or supervisor of Brinley's Grading.
Given this evidence, a genuine issue of material fact exists as to whether Mr. Brinley was a manager or supervisor for purposes of the “Fellow Employee” exclusion. Because Nationwide has identified no other basis for excluding coverage of the claims against Mr. Brinley, we reverse the portion of the trial court's order granting Nationwide summary judgment with respect to its liability for claims asserted against Mr. Brinley. D. Uninsured Motorist Coverage
Finally, Ms. Taft argues that the trial court erred in not declaring that coverage existed for the claims in the underlying action under the Policy's uninsured motorist (“UM”) provisions. Ms. Taft points out that Pro–Tech was a “Named Insured” on the Policy. She then argues: “If, as the trial court found, the remaining Defendants are not insured for the death of Mr. Paul under the policy covering Brinley's Grading Service, Inc., Mr. Paul's Estate is entitled to coverage under the North Carolina Uninsured Motorist Coverage policy carried through his employer, Pro Tech Management, as he was the employee of a named insured, who was working on an insured trailer when he was struck by an uninsured motorist[.]”
The record, however, contains no evidence that Ms. Taft ever asserted a UM claim against Nationwide. “N.C. Gen.Stat. § 20–279.21(b)(3)(a), provides that in order for a UM carrier to be bound by a judgment against the uninsured motorist, the insurer must be ‘served with copy of summons, complaint or other process in the action against the uninsured motorist by registered or certified mail, return receipt requested, or in any manner provided by law.’ “ Eckard v. Smith, 166 N.C.App. 312, 324, 603 S.E.2d 134, 142 (2004) (quoting N.C. Gen.Stat. § 20–279.21(b)(3)(a) (2003)), aff'd per curiam, 360 N.C. 51, 619 S.E.2d 503 (2005). “Once the insurer is properly served, it becomes ‘a party to the action between the insured and the uninsured motorist though not named in the caption of the pleadings and may defend the suit in the name of the uninsured motorist or in its own name.’ “ Id. (quoting N.C. Gen.Stat. § 20–279.21(b)(3)(a) (2003)).
Here, nothing in the record indicates that Ms. Taft ever asserted a UM claim as provided in the statute. Although Ms. Taft did raise the issue at the summary judgment hearing, the court could not declare coverage over, and Nationwide could not be bound by judgment on, a claim that had not yet been properly asserted. See Reese v. Barbee, 129 N.C.App. 823, 826, 501 S.E.2d 698, 700 (1998) (holding actual notice to insurer insufficient without compliance with statutory procedure set out in N.C. Gen.Stat. § 20–279.21(b)(3)(a)), aff'd per curiam by equally divided court, 350 N.C. 60, 510 S.E.2d 374 (1999). Accordingly, the trial court did not err in failing to declare that coverage existed under the Policy's UM provisions.
Conclusion
In sum, the trial court erred in concluding that Nationwide had no duty to defend Brinley's Grading and Mr. Brinley in the underlying action. We reverse the order below in part and remand for entry of judgment in favor of Brinley's Grading and Mr. Brinley on Nationwide's claim that it had no duty to defend the two defendants. The trial court further erred in concluding that no genuine issue of material fact existed as to coverage for claims against Mr. Brinley under the Policy. With respect to that issue, we reverse and remand for further proceedings. We, however, affirm the trial court's order to the extent it granted summary judgment to Nationwide on the claim that the Policy does not provide coverage for the claims against Brinley's Grading and Mr. Dominguez.
We additionally note that the trial court's order contains a clerical error. In part, the order provides: “Defendant's Amended Motion for Summary Judgment should be granted.” Read in full, however, the order leaves no doubt that the trial court granted summary judgment for plaintiff Nationwide and not for any defendants.
“When, on appeal, a clerical error is discovered in the trial court's judgment or order, it is appropriate to remand the case to the trial court for correction because of the importance that the record ‘speak the truth.’ “ State v. Smith, 188 N.C.App. 842, 845, 656 S.E.2d 695, 696 (2008) (quoting State v. Linemann, 135 N.C.App. 734, 738, 522 S.E.2d 781, 784 (1999)). Accordingly, upon remand, the trial court should correct the clerical error as it pertains to the affirmed portions of its order.
Affirmed in part, reversed and remanded in part. Chief Judge MARTIN and Judge STROUD concur.
Report per Rule 30(e).