Court Opinion

ID: 9561345
Source: CourtListenerOpinion
Date Created: 2023-08-21 18:08:03.268842+00
Date Added: 2024-06-11T09:13:44.782965
License: Public Domain

Justice Frye
dissenting.
The majority holds the trial court correctly dismissed the case against Travelers Indemnity Company, plaintiffs’ uninsured motorist (UM) carrier, because service was improper against defendant Nelson (the tort-feasor). Therefore, the majority concludes that the Court of Appeals erred in deciding that the case could proceed against Travelers to determine whether plaintiffs were entitled to UM coverage. I do not believe that our case law and the statute call for the result reached by the majority. Therefore, I respectfully dissent.
Under the Motor Vehicle Safety and Financial Responsibility Act,
every policy of bodily injury liability insurance covering liability arising out of the ownership, maintenance or use of any motor vehicle, which policy is delivered or issued for delivery in this State, shall be subject to the following provisions which need not be contained therein.
a. A provision that the insurer shall be bound by a final judgment taken by the insured against an uninsured motorist if the insurer has been served with copy of summons, complaint or other process in the action against the uninsured motorist .... The insurer, upon being served as herein provided, shall be 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.
N.C.G.S. § 20-279.21(b)(3)a. When plaintiffs were unable to settle their claims growing out of an accident with an uninsured motorist, suit was instituted against the uninsured motorist and plaintiff’s insurance carrier, Travelers Indemnity Company, pursuant to the above statute. Summonses were issued against the uninsured motorist and the insurance carrier. The insurance carrier, appearing in the name of defendant, answered the complaint, denying any negligence on the part of the named defendant and alleging contributory negligence on the part of plaintiff. Subsequently, the named defend*550ant’s motion to dismiss as to him was allowed on the grounds of insufficiency of service of process, it appearing that the named defendant’s son rather than defendant himself had been served with the summons. The crucial question is whether a case may proceed to judgment against the uninsured motorist carrier since any judgment actually obtained would not be enforceable against the named defendant tort-feasor.
The Court of Appeals reasoned that:
although plaintiffs cannot obtain a judgment against defendant because he properly asserted the defense of lack of personal jurisdiction, this action may proceed against Travelers to determine whether plaintiffs are entitled to uninsured motorist coverage. Furthermore, Travelers, by failing to properly assert the defense of lack of personal jurisdiction in its answer, may not rely on the defense that plaintiffs cannot “reduce its right to judgment” against defendant because of lack of personal jurisdiction in determining whether plaintiffs are “legally entitled to recover damages” from defendant.
Grimsley v. Nelson, 117 N.C. App. 329, 335-36, 451 S.E.2d 336, 340 (1994). I agree with the Court of Appeals and therefore dissent from that portion of the decision of the majority of this Court which reverses the Court of Appeals on this issue.
The majority says that nothing remained in the complaint to pursue a claim against Travelers Indemnity because the tort-feasor was dismissed for insufficiency of service of process. In defense of this position, the majority cites two cases from this Court and three cases from our Court of Appeals. However, those cases, in my opinion, are not controlling in the peculiar posture of this case.
The majority relies on Silvers v. Horace Mann Ins. Co., 324 N.C. 289, 378 S.E.2d 21 (1989), for the proposition that a UM carrier’s liability is derivative of the tort-feasor’s liability. I agree. Nevertheless, as stated in the Silvers’ majority opinion which I joined:
The issue is whether an insured plaintiff who has entered into a consent judgment with a tort-feasor and the tort-feasor’s liability insurance carrier, without notice to or the consent of the insured’s underinsured motorist (UIM) coverage carrier, in violation of the terms of the UIM policy, may nevertheless recover UIM benefits under the policy.
*551Id. at 290, 378 S.E.2d at 22 (footnote omitted). The Court answered in the affirmative. After construing “legally entitled to recover” to mean that the carrier’s UIM liability is derivative in nature, the Court added that “[t]he analysis does not end here, however.” Id. at 294, 378 S.E.2d at 25. The Court then analyzed the internally conflicting provisions of the policy and statute, noted the remedial nature of the statute, and concluded that it was not the intent of the legislature that Silvers be prohibited from recovering UIM benefits from her UIM carrier. I believe that the same legislative intent that permitted Silvers to recover from her UIM carrier after entering into a consent judgment with the tort-feasor and his insurance carrier in violation of the policy would also permit plaintiffs in the instant case to recover from their UM carrier after the tort-feasor was dismissed from the suit because of insufficiency of service of process.
The majority also cites Brown v. Lumbermens Mut. Cas. Co., 285 N.C. 313, 204 S.E.2d 829 (1974). However, the instant case is distinguishable from Brown. The issue in Brown was stated by the Court as follows:
Is an action against an insurer, brought under the uninsured motorist insurance endorsement to an automobile liability insurance policy to recover damages for a death caused by the wrongful act of an uninsured motorist, subject to the two-year statute of limitations prescribed for the commencement of the tort action for wrongful death, G.S. 1-53(4), or the three-year limitation prescribed for actions on contract, G.S. 1-52(1)?
Id. at 315, 204 S.E.2d at 830. The plaintiff had instituted suit against the insurance carrier only and the insurance carrier had asserted the defense of the statute of limitations. This Court simply concluded that the statute of limitations was two years rather than three years and that defendant had specifically pled a defense that defeated the plaintiff’s claim. In the instant case, both the tort-feasor and the insurance carrier were parties to the action. The tort-feasor successfully raised the defense of insufficiency of service of process while the insurance carrier did not.
The majority relies heavily on Buchanan v. Buchanan, 83 N.C. App. 428, 350 S.E.2d 175 (1986), disc. rev. denied, 319 N.C. 224, 353 S.E.2d 406 (1987), and Spivey v. Lowery, 116 N.C. App. 124, 446 S.E.2d 835, disc. rev. denied, 338 N.C. 312, 452 S.E.2d 312 (1994). Again, as with Brown, Buchanan and Spivey are distinguishable. In Buchanan, the plaintiff settled with the tort-feasor’s insurance car*552rier. In a subsequent suit by the plaintiff against her UIM carrier, the trial court granted summary judgment on the ground that the release of the tort-feasor and his insurance carrier also released the UIM carrier. Similarly, in Spivey, the plaintiff settled with the tort-feasor’s insurance carrier and then subsequently filed suit against the tortfeasor and her UIM carrier. The trial court dismissed the suit against the carrier because of the general release signed by the plaintiff.
However, the instant case is factually different from Buchanan and Spivey. The release in Buchanan purported to discharge “any other person, firm or corporation charged or chargeable with responsibility or liability.” Buchannan, 83 N.C. App. at 429, 350 S.E.2d at 176 (emphasis added). The plaintiff in Spivey signed a very similar release. Spivey, 116 N.C. App. at 125, 446 S.E.2d at 836. By signing the releases, the plaintiffs in both cases ended any further liability and the matter was closed. In the case sub judice, the issue of liability has never been settled or adjudicated. In this context, there is a significant difference between a suit dismissed because the plaintiff signed a general release that absolved everyone from liability and one where the suit against the tort-feasor was dismissed for insufficiency of service of process without a determination on the merits of the underlying claim.
The majority also cites McLaughlin v. Martin, 92 N.C. App. 368, 374 S.E.2d 455 (1988). However, McLaughlin is also distinguishable. In McLaughlin, the plaintiffs, without filing a suit for damages, sought a declaratory judgment to determine the status and limitations of the uninsured motorist coverage available to them from defendants’ UM carriers. The Court of Appeals affirmed the trial court’s dismissal on the grounds that there was no actual case or controversy. The issue was one of jurisdiction, and the Court of Appeals said that the parties could not create jurisdiction by stipulation.
In the instant case, plaintiffs had filed an action for damages, not a declaratory judgment action. Unlike in McLaughlin, there is not an issue as to whether plaintiffs will ever file suit for damages resulting from the automobile accident. This is what this suit is about. Thus, none of the decisions relied on by the majority are direct authority for the issue before this Court.
The majority also finds support for its decision in N.C.G.S. § 20-279.21(b)(3)a. However, the statute simply provides that an insurance carrier shall be bound by a final judgment against an uninsured motorist as long as the carrier has been served with a summons *553and complaint. Nothing in this statute excludes the possibility that plaintiffs’ insurance carrier could be held liable in a suit against the uninsured motorist and the UM carrier, notwithstanding dismissal of the uninsured motorist for insufficiency of service of process.
I would hold that when, as here, plaintiffs’ UM carrier makes a general appearance in an action by filing an answer in the name of defendant without raising the defense of insufficiency of service of process on the tort-feasor, the case may proceed to judgment against the UM carrier based on an adjudication by the jury of the tortfeasor’s liability, notwithstanding the dismissal of the tort-feasor for insufficiency of service of process. This interpretation is consistent with the Motor Vehicle Safety and Financial Responsibility Act to provide recourse for innocent victims for damages from the negligent operation of automobiles by irresponsible persons. See Nationwide Mut. Ins. Co. v. Fireman’s Fund Ins. Co., 279 N.C. 240, 182 S.E.2d 571 (1971).