Opinion ID: 1249965
Heading Depth: 1
Heading Rank: 1

Heading: summary of facts and holdings of the lower courts

Text: On 24 September 1979 plaintiffs, the Governor, the Commissioner of Insurance and the Attorney General, filed a complaint for declaratory relief and motion for preliminary injunction against the North Carolina Reinsurance Facility (Facility), the North Carolina Rate Bureau (Rate Bureau), and approximately 300 of their member companies. Plaintiffs challenged the legality of specific recoupment surcharges imposed by the industry on certain motor vehicle insurance policyholders in addition to regular insurance premiums. Plaintiffs alleged that the surcharges are unlawful on numerous grounds, primarily that they are rates which may not be lawfully charged until filed with and reviewed by the Commissioner of Insurance. Pending a final resolution of the case on its merits, plaintiffs sought to enjoin collection of the surcharges. [1] The motion for preliminary injunction was heard by Judge Braswell at the 18 February 1980 Session of Superior Court, Wake County. In an order filed 26 February 1980 Judge Braswell denied plaintiffs' motion for preliminary injunction on the grounds (1) that the surcharges were lawful and proper and in compliance with G.S. § 58-248.34(e), G.S. § 58-248.33( l ), G.S. § 58-248.34(f) and other applicable provisions of the Facility's Plan of Operation, (2) that no filing with or approval by the Commissioner of Insurance is required by law with respect to the surcharges in question, (3) that plaintiffs failed to demonstrate probable cause to believe that they would be successful upon the ultimate determination of the case, (4) that neither the plaintiffs nor the using and consuming public would be irreparably damaged by collection of the recoupment surcharges during the pendency of the litigation, and (5) that there was a substantial likelihood that the Facility would in the near future be unable to meet its obligations as they become due should collection of the recoupment surcharges be enjoined pendente lite and, instead, that the Facility and its member companies would suffer irreparable harm if a preliminary injunction was issued. Plaintiffs appealed the trial court order to the North Carolina Court of Appeals. On 21 October 1980, the Court of Appeals, Judge Wells writing, modified and remanded. That court held that the trial court properly denied plaintiffs' motion to enjoin collection of the disputed surcharges pendente lite, but that the denial of plaintiffs' motion that defendants be required to file the disputed surcharges with the Commissioner of Insurance was erroneous. The Court of Appeals agreed with plaintiffs that defendants were required to file the surcharges so that they could be reviewed by the Commissioner, and, if appropriate, by the courts as required by G.S. § 58-248.33( l ) and G.S. § 58-248.34(d). The court reasoned that if the surcharges were not so filed and reviewed, persons paying the surcharges would be denied the protection of the laws, may not be able to recover any excessive charges paid by them and would therefore suffer irreparable loss should plaintiffs prevail on the merits. Judge Hedrick dissented. In his opinion, the appeal should be dismissed since it was from the denial of a preliminary injunction and no substantial right of plaintiffs would be lost if the appeal was not determined before a final hearing on the merits. Defendants gave notice of appeal to this Court. Since Judge Hedrick's dissent did not directly address the filing issue, defendants also simultaneously petitioned this Court for discretionary review which we allowed on 2 December 1980. Oral arguments were heard on 10 February 1981. We disagree with the holding of the Court of Appeals and reverse. Other facts important to an understanding of our decision are noted below.