Opinion
No. 04-1068.
Filed 20 September 2005.
Pasquotank County No. 02 CVS 649.
Appeal by plaintiff from judgment entered 22 June 2004 by Judge J. Richard Parker in Pasquotank County Superior Court. Heard in the Court of Appeals 22 August 2005.
C. Everett Thompson, II, for plaintiff-appellant. Walker, Clark, Allen, Grice Ammons, L.L.P., by C. Adam Helmer, for defendant-appellee.
Plaintiff Ralph Michael Hopper (Hopper) was injured while a passenger in a vehicle driven by Susan Prince Watley (Watley). The Watley vehicle was struck by an automobile driven by defendant, Ila Blake Flynn, and owned by her husband, Floyd Flynn (the Flynns). At the time of the collision, the Flynns were insured by Allstate Insurance Company under a liability policy with limits of $100,000 per person. Watley's vehicle was insured by State Farm Insurance Company, and plaintiff was insured by Progressive Insurance Company.
The Flynns' insurer, Allstate, tendered the sum of $100,000 to Hopper on behalf of the Flynns and the parties entered into a settlement agreement in which Hopper reserved his right to assert claims against the under insured motorist (UIM) coverage provided by State Farm and Progressive. Plaintiff subsequently filed this action alleging that he is entitled to recover under the UIM coverage of the State Farm and Progressive policies. State Farm filed an answer in which it alleged that it has UIM limits of $100,000 and, as the primary UIM carrier, is entitled to full credit for the $100,000 paid plaintiff by Allstate.
Pursuant to a motion in the cause filed by Allstate seeking to be relieved of its duty to defend defendant Ila Flynn, the trial court ordered that Allstate be released from liability regarding the accident but explicitly ordered that defendant Flynn was not released "from liability as a result of her alleged negligence, or Progressive and State Farm from any alleged liability under underinsured motorist coverage and specifically preserves all right of the plaintiff to continue this cause of action."
The matter was submitted to the trial court, sitting without a jury, upon stipulated facts to determine the issue of "whether the Progressive policy issued for UIM coverage to the plaintiff or the State Farm Insurance policy covering the vehicle in which the plaintiff was riding as to which policy is primary and which policy is excess coverage." The trial court concluded as a matter of law "that the State Farm policy is primary and is therefore entitled to the full credit of the $100,000 paid by Allstate and that the Progressive policy provides the excess coverage." Plaintiff appeals. "Insurance policies are considered contracts between two parties." Metropolitan Prop. and Casualty Ins. Co. v. Lindquist, 120 N.C. App. 847, 851, 463 S.E.2d 574, 576 (1995). Since contract interpretation is a question of law, we apply a de novo standard of review to the trial court's conclusion of law. Harris v. Ray Johnson Constr. Co., 139 N.C. App. 827, 829, 534 S.E.2d 653, 654 (2000).
Plaintiff argues that the "other insurance" provisions of the State Farm and Progressive policies are mutually repugnant so that neither is primary and any credit for payment on behalf of the underinsured motorist, Flynn, is prorated. "Other insurance" or "excess" clauses can be mutually repugnant when they "are worded in such a way that it is impossible to distinguish between them or to determine which policy is primary." Aetna Casualty and Surety Co. v. Continental Ins. Co., 110 N.C. App. 278, 282, 429 S.E.2d 406, 409 (1993). The result of deeming excess clauses mutually repugnant is that "neither . . . will be given effect, leaving the insured's claim to be pro rated between the separate policies according to their respective limits." N.C. Farm Bureau Mut. Ins. Co. v. Bost, 126 N.C. App. 42, 52, 483 S.E.2d 452, 459, disc. review denied, 347 N.C. 138, 492 S.E.2d 25 (1997).
Under the "Other Insurance" clause of Hopper's Progressive policy, when there are multiple applicable policies,
the following order shall be used to determine which insurer is responsible for providing payment:
1. a policy insuring the injured person [Hopper] as a named insured; then
2. a policy insuring the injured person's spouse or any relative; then
3. policies insuring the owner or operator of the motor vehicle occupied in the accident. [State Farm]
If we are responsible for providing payment under this Part III to an insured person and there is more than one (1) applicable policy of the same priority, we will pay only our share of the damages. Our share is the proportion that our Limit of Liability bears to the total of all available coverage limits on the same level of priority.
Therefore, under the language of the Progressive policy, it would be primary, and the State Farm policy considered excess. However, Watley's State Farm UIM coverage provides:
if there is other applicable similar insurance, we will pay only our share of the loss. Our share is the proportion that our limit of liability bears to the total of all applicable limits. However, any insurance we provide with respect to a vehicle you [Watley] do not own shall be excess over any other collectible insurance.
It follows that State Farm's UIM coverage is not "excess" over other insurance, because Watley owned the vehicle in which the accident occurred. Iodice v. Jones, 133 N.C. App. 76, 78-79, 514 S.E.2d 291, 293 (1999). Because each policy would be considered primary under its own terms, we determine that these clauses are mutually repugnant and we can give neither effect. Therefore, the trial court erred in determining the State Farm Policy was primary and the Progressive Policy was excess; plaintiff Hopper's UIM claim must be pro rated between both insurers, according to their respective limits of liability.
Reversed. Judges BRYANT and GEER concur.
Report per Rule 30(e).