Opinion
No. 05-287.
Filed February 7, 2006.
New Hanover County No. 00 CVS 3709.
Appeal by plaintiffs from judgment entered 19 February 2003 by Judge W. Allen Cobb, Jr. in New Hanover County Superior Court. Heard in the Court of Appeals 2 November 2005.
Vaiden P. Kendrick for plaintiff-appellants. Crossley, McIntosh, Prior Collier, by Clay Allen Collier, for defendant-appellee Auten. Cox Tillery, by J. Thomas Cox, Jr., for defendant-appellee North Carolina Farm Bureau.
Alan Steve Lambeth and Betty S. Lambeth ("plaintiffs") appeal an order of the trial court granting summary judgment for Michael Auten. For the reasons stated herein, we affirm.
The factual and procedural history of the case sub judice is as follows: Plaintiffs owned a restaurant building located at 4107 Oleander Drive in Wilmington, North Carolina. On 29 December 1997, plaintiffs leased the property to MGT Eastern Carolina, Inc. ("MGT"). The lease required MGT to obtain fire and extended coverage insurance on the building in the amount of $500,000.00 and personal property in the amount of $200,000.00. The lease also required that plaintiffs be named as insureds under the policy.
Caryn Myers ("Myers"), a representative of MGT, contacted defendant Auten to procure the insurance coverage required by the lease. Thereafter, Farm Bureau issued a policy of insurance providing $700,000.00 total coverage to the property. The insurance policy, post-marked 17 February 1998, was forwarded to Myers. Plaintiffs were not named as insureds under the policy.
On 9 March 1998, the building and contents located at 4107 Oleander Drive were destroyed by a fire of unknown origin. By correspondence dated 5 August 1998, Farm Bureau denied coverage for damage caused by the fire of 9 March 1998.
MGT filed suit against Farm Bureau contesting its coverage decisions and against Auten alleging, among other things, breach of fiduciary duty, negligence and failure to procure the requested coverage. The complaint also asserted claims against the Lambeths. In a separate action, the Lambeths filed suit against MGT alleging actual and consequential damages for breach of the lease and other claims. The cases were consolidated for trial. The jury returned a verdict against Farm Bureau and judgment was entered accordingly. Farm Bureau satisfied the judgment and MGT, thereafter, satisfied the damage claims of the Lambeths pursuant to the lease agreement. Farm Bureau paid sums in excess of $700,000.00 for claims arising out of the fire loss of 9 March 1998. Subsequently, plaintiffs filed the instant action against Farm Bureau and Auten seeking compensatory damages beyond the limits of the insurance policy and punitive damages resulting from the fire loss of 9 March 1998. The complaint alleges plaintiffs are third-party beneficiaries and are entitled to pursue claims against Farm Bureau for breach of contract and negligence and a claim against Auten for negligence.
Farm Bureau and Auten filed motions for summary judgment. The trial court granted Auten's motion for summary judgment in an order entered 19 February 2003. Plaintiffs proceeded to trial against Farm Bureau and a jury found that Farm Bureau and MGT did not intend that plaintiffs be direct beneficiaries of the insurance contract between Farm Bureau and MGT. Plaintiffs appeal from the trial court's grant of summary judgment for Auten.
"[T]he standard of review on appeal from summary judgment is whether there is any genuine issue of material fact and whether the moving party is entitled to a judgment as a matter of law." Bruce-Terminix Co. v. Zurich Ins. Co., 130 N.C. App. 729, 733, 504 S.E.2d 574, 577 (1998) (citing Wilmington Star-News, Inc. v. New Hanover Regional Medical Center, Inc., 125 N.C. App. 174, 178, 480 S.E.2d 53, 55, appeal dismissed, 346 N.C. 557, 488 S.E.2d 826 (1997)). See also N.C.R. Civ. P. 56(c). The party moving for summary judgment has the burden of establishing the lack of any triable issue. Schmidt v. Breeden, 134 N.C. App. 248, 251, 517 S.E.2d 171, 174 (1999). "A defendant who moves for summary judgment may meet this burden by showing either that (1) an essential element of plaintiff's claim is non-existent; (2) plaintiff cannot produce evidence to support an essential element of its claim; or (3) plaintiff cannot surmount an affirmative defense raised in bar of its claim." Lyles v. City of Charlotte, 120 N.C. App. 96, 99, 461 S.E.2d 347, 350 (1995), rev'd on other grounds, 344 N.C. 676, 477 S.E.2d 150 (1996). The court must view the evidence presented by the parties "in the light most favorable to the non-movant." Bruce-Terminix, 130 N.C. App. at 733, 504 S.E.2d at 577. Summary judgment is a somewhat drastic remedy and therefore, the court must cautiously observe its requirements so that no party is "deprived of a trial on a genuine disputed factual issue." Kessing v. Mortgage Corp., 278 N.C. 523, 534, 180 S.E.2d 823, 830 (1971).
In the instant case, plaintiffs assert a claim against defendant Auten for negligence in failing to procure an insurance policy in conformity with the terms of the lease agreement between plaintiffs and MGT. "To establish actionable negligence, plaintiffs must show that: (1) defendant failed to exercise due care in the performance of some legal duty owed to plaintiff under the circumstances; and (2) the negligent breach of such duty was the proximate cause of the injury." Bolkhir v. NC State Univ., 321 N.C. 706, 709, 365 S.E.2d 898, 900 (1988). "A duty is defined as an obligation, recognized by the law, requiring the person to conform to a certain standard of conduct[.]" Davis v. N.C. Dept. of Human Resources, 121 N.C. App. 105, 112, 465 S.E.2d 2, 6 (1995), disc. review denied, 343 N.C. 750, 473 S.E.2d 612 (1996) (citation omitted).
In arguing defendant is liable to plaintiffs as third-party beneficiaries of the insurance policy defendant was to procure for MGT, plaintiffs cite Condominium Assoc. v. Scholz Co., 47 N.C. App. 518, 268 S.E.2d 12 (1980). Plaintiffs' reliance on Scholz is misplaced as that case is distinguishable. In Scholz, this Court addressed the issue of architect liability, an emerging area of tort law in which the scope of liability was undergoing considerable expansion. The law applicable to insurance intermediaries is well established in our state. The legal duty of insurance agents or brokers is limited to the insured or prospective insured who make application for insurance coverage. See Phillips v. State Farm Mut. Auto Ins. Co., 129 N.C. App. 111, 113, 497 S.E.2d 325, 327 (1998); Wiles v. Mullinax, 267 N.C. 392, 395, 148 S.E.2d 229, 231-32 (1966); Olvera v. Charles Z. Flack Agency, Inc., 106 N.C. App. 193, 195-96, 415 S.E.2d 760, 762 (1992). As plaintiffs have not cited any authority for the proposition that defendant Auten owed them any legal duty, we decline to so hold under the facts of the instant case. Thus, we affirm the trial court's order granting summary judgment for defendant Auten.
Affirmed.
Judges TYSON and JACKSON concur.
Report per Rule 30(e).