Court Opinion

ID: 4218160
Source: CourtListenerOpinion
Date Created: 2017-11-07 13:15:39.521569+00
Date Added: 2024-06-11T07:47:12.359080
License: Public Domain

IN THE COURT OF APPEALS OF NORTH CAROLINA

                                 No. COA16-570

                             Filed: 7 November 2017

Davidson County, No. 11 CVS 2590

WILLIAM HAIRSTON, JR., Plaintiff,

            v.

ASHWELL BENNETT HARWARD, JR., Defendant.

      Appeal by plaintiff from judgment entered 1 December 2015 by Judge Joseph

N. Crosswhite in Superior Court, Davidson County. Heard in the Court of Appeals

30 November 2016.

      Maynard & Harris, Attorneys at Law, PLLC, by C. Douglas Maynard, Jr., for
      plaintiff-appellant.

      Davis and Hamrick, L.L.P., by Kent L. Hamrick and Ann C. Rowe, for
      defendant-appellee Ashwell Bennett Harward, Jr.

      Burton, Sue & Anderson, LLP, by Stephanie W. Anderson, for unnamed
      defendant-appellee Erie Insurance Exchange.

      Whitley Law Firm, by Ann C. Ochsner, and Martin & Jones, PLLC, by
      Huntington M. Willis, for North Carolina Advocates for Justice, amicus curiae.

      Pinto Coates Kyre & Bowers, PLLC, by Deborah J. Bowers and Andrew G.
      Pinto, for North Carolina Association of Defense Attorneys, amicus curiae.

      STROUD, Judge.

      Plaintiff William Hairston, Jr. (“plaintiff”) appeals from the trial court’s

judgment allowing defendant Ashwell Bennett Harward, Jr. (“defendant Harward”)’s
                                HAIRSTON V. HARWARD

                                   Opinion of the Court

motion for credits and setoffs against the tort judgment for the money plaintiff

received through its underinsured motorist (“UIM”) provider, unnamed defendant

Erie Insurance Exchange (“unnamed defendant Erie”). The trial court’s judgment

also found that unnamed defendant Erie waived its right to subrogation and had no

further duty. On appeal, plaintiff argues that the trial court should not have allowed

the credit and that the court abused its discretion by not permitting plaintiff to take

depositions of defendant’s insurance provider, State Farm, and unnamed defendant

Erie representatives. We hold that the trial court did not err in allowing defendant

Harward the credit against the judgment for unnamed defendant Erie’s payment

under the settlement agreement, since unnamed defendant Erie waived all rights to

subrogation. We further hold that the trial court did not abuse its discretion by not

allowing plaintiff to take the additional requested depositions.

                                         Facts

      Plaintiff filed a complaint on 27 July 2011 against defendant Harward seeking

to recover for injuries plaintiff received in a car crash between plaintiff and defendant

Harward. Plaintiff later amended his complaint seeking additional relief from two

other defendants; those defendants were later dismissed without prejudice and are

not parties to this appeal. Unnamed defendant Erie filed a notice of appearance on

17 April 2013. On 14 August 2014, a jury returned a verdict finding plaintiff was

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                               HAIRSTON V. HARWARD

                                  Opinion of the Court

injured by defendant Harward’s negligence and that he was entitled to recover

$263,000.00 for his personal injuries.

      On 15 September 2014, defendant Harward moved for setoffs and credits

against the trial court’s judgment. The trial court entered an order on 16 October

2014 reducing the judgment to $230,000.00 after finding that “[t]he parties agree that

[defendant Harward] is entitled to setoffs or credits totaling $33,000.00 for the

reasons set out in [defendant Harward’s] September 15, 2014 Motion and that said

setoffs or credits should be applied so that the judgment amount will be

$230,000.00[.]” The court’s order noted that the parties disagreed over whether

defendant Harward should receive a credit for payment plaintiff received -- following

the jury verdict -- from unnamed defendant Erie, his underinsured motorist coverage

(“UIM”) provider.

      Plaintiff filed a response to defendant’s motion for setoffs and credits against

the judgment on 17 September 2015. On 25 September 2015, unnamed defendant

Erie’s attorney filed an affidavit that included as “Exhibit ‘A’ ” a settlement

agreement between unnamed defendant Erie and plaintiff, entered on or about 3

October 2014. Under the settlement agreement, unnamed defendant Erie agreed to

pay $145,000.00 in UIM coverage under plaintiff’s policy. The affidavit noted:

             Following the verdict, Erie paid the remaining balance of
             $145,000.00 of its [UIM coverage] to the plaintiff in
             exchange for a Full and Final Release of All Claims . . .,
             which clearly releases Erie’s right of reimbursement and

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                                 HAIRSTON V. HARWARD

                                    Opinion of the Court

              does not require the plaintiff to hold any amounts
              recovered from the defendant in trust.

       A hearing was held on defendant Harward’s motion on 29 October 2015, and

on 1 December 2015, the trial court entered its judgment, which contained these

findings of fact:

                   1.      Erie, Plaintiff’s underinsured motorists
              (“UIM”) carrier, waived its subrogation rights prior to the
              commencement of trial.

                    2.      On September 11, 2014 counsel for Erie
              mailed directly to Plaintiff’s counsel Erie’s check for
              $145,000.00 which represented the remaining balance of
              Plaintiff’s UIM coverage with Erie.

                     3.     In exchange for said payment Plaintiff
              executed a Full and Final Release of All Claims against
              Erie which clearly showed that Erie waived any and all
              rights of reimbursement and Plaintiff was not required to
              hold any amounts recovered from Defendant in trust.

                      4.     On October 9, 2014 State Farm, Defendant’s
              liability carrier, mailed a check for $97,000.00 to Plaintiff’s
              counsel.

                    5.    North Carolina courts have adopted the
              common law principle that a plaintiff should not be
              permitted a double recovery for a single injury, Baity v.
              Brewer, 122 N.C. App. 645, 470 S.E.2d 836 (1996); Seafare
              Corp. v. Trenor Corp., 88 N.C. App. 404, 363 S.E.2d 643
              (1987).

                    6.    In Wood v. Nunnery, 222 N.C. App. 303, 730
S.E.2d 222 (2012) the Court of Appeals cited the UIM
              statute:

                     In the event of payment, the underinsured motorist

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                   HAIRSTON V. HARWARD

                       Opinion of the Court

       insurer shall be either: (a) entitled to receive by
       assignment from the claimant any right or (b)
       subrogated to the claimant’s right regarding any
       claim the claimant has or had against the owner,
       operator, or maintainer of the underinsured
       highway vehicle, provided that the amount of the
       insurer’s right by subrogation or assignment shall
       not exceed payments made to the claimant by the
       insurer. N.C. Gen. Stat. § 20-279.21(b)(4) (2011). 88
N.C. App. at 307, 730 S.E.2d at 225.

       7.   In Wood, unlike this case, the UIM carrier
paid the money to the clerk and not to the plaintiff directly
and did not waive its right of subrogation; therefore, the
UIM carrier still retained the right of subrogation.
Because the UIM carrier’s subrogation right remained, the
Defendant in Wood was not entitled to credit for payments
made by the UIM carrier.

       8.     The Court has carefully considered
Defendant’s motion for credits and setoffs and is of the
opinion and so finds, in its sound discretion, that
Defendant’s motion should be allowed; Defendant is
entitled to a credit for the $97,000.00 paid by State Farm
directly to Plaintiff and is further entitled to a credit for the
$145,000.00 paid by Erie directly to Plaintiff.

      9.     Because Erie has waived its right to
subrogation and reimbursement, the Court is of the opinion
and does so find that Erie has no further duty in this
matter.

       10.     Plaintiff’s motion for leave to take further
depositions has been carefully considered by the Court and
the Court, in its sound discretion, is of the opinion and so
finds that . . . the motion should be denied at this time.

      11.    Plaintiff’s motions to strike the affidavits of
Kent L. Hamrick and Stephanie W. Anderson have also
been carefully considered by the Court and the Court, in its

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                        HAIRSTON V. HARWARD

                           Opinion of the Court

      sound discretion, is of the opinion and so finds that the
      motions should be denied.

            12.   Counsel for Plaintiff argued that Plaintiff’s
      UIM coverage is a collateral source and requested that the
      Court enter an order to that effect, but the Court is of the
      opinion that such is not necessary for the entry of this
      judgment.

The trial court then concluded:

            1.    This court concludes as a matter of law that
      the UIM carrier, Erie, has waived its right of subrogation,
      waived any right to reimbursement and paid the
      $145,000.00 it owed directly to the Plaintiff. Therefore,
      since no subrogation rights remain, the Defendant
      Harward is entitled to credit for the $145,000.00 payment
      made by the UIM carrier. To find otherwise would create
      a double recovery for the plaintiff which is disfavored by
      the common law of North Carolina.

             2.    Defendant Harward is also entitled to a credit
      for the $97,000.00 paid directly to Plaintiff by State Farm.

            3.     Because Erie has waived its rights of
      subrogation and reimbursement, it has no further duty in
      this matter.

            4.    Plaintiff’s motion for leave to take post-
      verdict depositions is addressed to the discretion of the
      Court and the Court concludes that the motion is not
      supported by sufficient facts to be allowed.

             5.     Plaintiffs have not presented the Court with
      sufficient facts why the affidavits of Kent L. Hamrick and
      Stephanie W. Anderson should not be considered.

            6.      The Court makes no ruling on whether
      Plaintiff’s UIM coverage is a collateral source as such issue
      would be more properly addressed by the Appellate Courts.

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                                     HAIRSTON V. HARWARD

                                        Opinion of the Court

       The trial court then ordered:

                      1.      Defendant Harward’s motion for credits and
               setoffs is allowed;

                      2.     Plaintiff shall have and recover from
               Defendant Harward the sum of $46,527.121 with post-
               judgment interest on said sum at the daily rate of $10.1977
               from the date of the entry of this judgment until paid; In
               light of this Court’s order of October 16, 2014, Plaintiff
               shall not be entitled to recover any pre-judgment interest
               on said sum;

                     3.     Because Erie has waived its right to
               subrogation and reimbursement, it has no further duty in
               this matter;

                      4.    All parties, named and unnamed, shall bear
               their own court costs, expenses and attorney’s fees;

                     5.     Plaintiff’s motions to strike the affidavits of
               Kent L. Hamrick and Stephanie W. Anderson are, in the
               Court’s discretion, denied.

                     6.     Plaintiff’s motion to take post-verdict
               depositions in the Court’s discretion, denied at this time[.]

Plaintiff timely appealed to this Court.

                                            Discussion

       1   We have been unable to determine, based on the record on appeal, precisely how the trial
court reached this sum as the remaining amount plaintiff could recover from defendant Harward after
all credits and setoffs were allowed. Defendant Harward paid plaintiff $46,669.92 in December 2015.
Based on our math, it appears that plaintiff ultimately recovered more than $321,000.00 -- on a
$263,000.00 jury verdict -- from multiple insurance companies and defendants. We realize that interest
on the judgment would have increased the amount owed. But since no one has disputed the
mathematical calculations on appeal -- other than regarding whether the $145,000 payment from
unnamed defendant Erie should have been credited against the judgment -- we leave the trial court’s
calculations undisturbed.

                                                -7-
                                HAIRSTON V. HARWARD

                                  Opinion of the Court

      Plaintiff raises two issues on appeal: first, whether the trial court erred when

it allowed defendant Harward to receive credit against the tort judgment for the

money plaintiff received from his UIM provider, Erie; and second, whether the trial

court abused its discretion when it denied plaintiff’s motion for leave to take post-

verdict depositions of defendant Erie and State Farm personnel. We find no error

and no abuse of discretion with the trial court’s judgment.

I.    Defendant Harward’s Credit for UIM Compensation Received

      Plaintiff first argues that “the trial court erred when it credited the tort

judgment against [defendant] Harward with the money plaintiff received in contract

from plaintiff’s insurance carrier [UIM coverage].”      (All caps and underlined in

original). The trial court concluded in the present case that “since no subrogation

rights remain, the Defendant Harward is entitled to credit for the $145,000.00

payment made by the UIM carrier [unnamed defendant Erie].”

                    When we review an order from a non-jury trial, we
             are strictly limited to determining whether the trial judge’s
             underlying findings of fact are supported by competent
             evidence, in which event they are conclusively binding on
             appeal, and whether those factual findings in turn support
             the judge’s ultimate conclusions of law. Conclusions of law
             drawn by the trial court from its findings of fact are
             reviewable de novo on appeal.

Holloway v. Holloway, 221 N.C. App. 156, 164, 726 S.E.2d 198, 204 (2012) (citations

and quotation marks omitted).

                                         -8-
                                HAIRSTON V. HARWARD

                                   Opinion of the Court

      Plaintiff’s brief begins with a discussion of the collateral source rule, and

plaintiff argues that UIM benefits are a collateral source, so defendant Harward

cannot reduce his tort liability for those benefits received from plaintiff’s provider,

unnamed defendant Erie.

                    The purpose of the collateral source rule is to exclude
             evidence of payments made to the plaintiff by sources other
             than the defendant when this evidence is offered for the
             purpose of diminishing the defendant tortfeasor’s liability
             to the injured plaintiff. The policy behind the rule is to
             prevent a tortfeasor from reducing his own liability for
             damages by the amount of compensation the injured party
             receives from an independent source. This rule is punitive
             in nature, and is intended to prevent the tortfeasor from a
             windfall when a portion of the plaintiff’s damages have
             been paid by a collateral source. In this [s]tate, and many
             others, the collateral source rule typically is applied only in
             actions arising under tort law.

Wilson v. Burch Farms, Inc., 176 N.C. App. 629, 638-39, 627 S.E.2d 249, 257 (2006)

(citations, quotation marks, and brackets omitted) (emphasis added).           See also

Badgett v. Davis, 104 N.C. App. 760, 764, 411 S.E.2d 200, 203 (1991) (“In summary,

the collateral source rule excludes evidence of payments made to the plaintiff by

sources other than the defendant when this evidence is offered for the purpose of

diminishing the defendant tortfeasor’s liability to the injured plaintiff.”). But the

collateral source rule is not relevant to the issue presented here, since there is no

question regarding evidence presented at the trial. Rather, the issue before us is the

proper sources of payment of the jury verdict and the allocation of the liability among

                                          -9-
                                    HAIRSTON V. HARWARD

                                       Opinion of the Court

defendant Harward’s liability insurer (State Farm), plaintiff’s underinsured carrier

(unnamed defendant Erie), and defendant Harward.

       The closest case to have touched on the issue in this case appears to be Wood

v. Nunnery, 222 N.C. App. 303, 730 S.E.2d 222 (2012) (“Wood I”)2. In Wood I, this

Court found that the trial court had erred when it concluded that payments the

plaintiff received from the defendant’s insurer (State Farm) and plaintiff’s UIM

provider (Firemen’s) “constituted satisfaction of the judgment entered against

defendant.” Id. at 305, 730 S.E.2d at 224. This Court concluded in Wood that the

defendant was only entitled to a credit against the judgment for the amount paid by

State Farm, the defendant’s insurer, but not for the amount paid by Firemen’s,

plaintiff’s UIM carrier. Id. at 308, 730 S.E.2d at 225-26. In so concluding, this Court

noted the reason defendant could not receive a credit for Firemen’s payment was

Firemen’s still had a statutory right of subrogation:

                      Since Firemen’s paid $202,627.58 into the office of
               the Clerk of Court for Forsyth County, and not to plaintiff
               directly, there would have been no “assignment” or
               subrogation receipt executed by plaintiff to Firemen’s.
               However, under subsection (b) of [N.C. Gen. Stat. § 20-
               279.21 (2011)], Firemen’s would be subrogated to plaintiff’s
               right against defendant to the extent of its payment
               ($202,627.58).     Because of this statutory right of
               subrogation, defendant cannot be entitled to a credit

       2 This Court issued a subsequent unpublished decision after Wood I was remanded to the trial
court. See Wood v. Nunnery, 232 N.C. App. 523, 757 S.E.2d 526, 2014 WL 640884, 2014 N.C. App.
Lexis 219 (2014) (unpublished) (“Wood II”). The North Carolina Supreme Court had the opportunity
to review Wood II, but instead found discretionary review was improvidently allowed. Wood v.
Nunnery, 368 N.C. 30, 771 S.E.2d 762 (2015) (per curiam).

                                              - 10 -
                                 HAIRSTON V. HARWARD

                                   Opinion of the Court

             against the judgment for payments made by Firemen’s as
             a UIM carrier. Since no party has raised the issue of
             whether Firemen’s is estopped from seeking subrogation
             from defendant by adopting defendant’s brief, we do not
             address that issue.

Id. at 307, 730 S.E.2d at 225.

      Here, unnamed defendant Erie waived its right to subrogation in the

settlement agreement with plaintiff, so the same argument would not apply. Unlike

Firemen’s in Wood I, unnamed defendant Erie is no longer a party and no longer has

a right to subrogation, so the amount is final and will not change in the future. The

issue of whether UIM coverage should be credited against payments made on a tort

judgment when subrogation and the right of reimbursement have been waived is an

issue this Court has not explicitly addressed. But based on this Court’s decision in

Wood I and other prior decisions, we hold that the trial court did not err in this case

when it allowed defendant Harward to credit unnamed defendant Erie’s UIM

payment towards the tort judgment amount.

      Additional case law indicates that subrogation may be relevant to the payment

of a judgment, as opposed to the evidence the jury can consider, because factoring in

subrogation at that stage helps prevent a windfall profit. For example, in Baity v.

Brewer, 122 N.C. App. 645, 646-47, 470 S.E.2d 836, 837-38 (1996), this Court found

that the trial court erred when it denied a defendant -- defendant Poole -- credit for

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                                  HAIRSTON V. HARWARD

                                     Opinion of the Court

the settlement payment the plaintiff received from another defendant, defendant

Brewer. This Court explained:

              Defendant Poole based her motion for credit not on any
              right of contribution under Chapter 1B but on the common-
              law principle that a plaintiff should not be permitted a
              double recovery for a single injury.

                     In Holland v. Southern Public Utilities Co., 208 N.C.
289, 180 S.E. 592 (1935), our Supreme Court stated that
              “any amount paid by anybody, whether they be joint tort-
              feasors or otherwise, for and on account of any injury or
              damage should be held for a credit on the total recovery in
              any action for the same injury or damage.” Id. at 292, 180
              S.E. at 593-94. . . . The rule in Holland is directly on point
              here and mandates reversal of the portion of the trial
              court’s judgment denying Poole a credit.

Baity, 122 N.C. App. at 647, 470 S.E.2d at 837-38.

       The amicus briefs and the parties have addressed public policy arguments at

some length, including plaintiff’s argument that if this Court finds the trial court’s

order was correct and its reasoning was allowed to remain, “it would foster collusion

between liability and UIM carriers to reach secret waivers of subrogation forcing

more cases to trial and depriving a plaintiff of his right to arbitrate under his UIM

policy which is contingent of the offer of policy limits by the liability carrier.” Plaintiff

may or may not be right, but this Court is not at liberty to change the law. These

same public policy arguments were raised in Wood II’s appeal to the Supreme Court,

and rather than address them further, the Court dismissed the case per curiam by

finding discretionary review was improvidently allowed. Wood, 368 N.C. at 30, 771

                                            - 12 -
                               HAIRSTON V. HARWARD

                                  Opinion of the Court

S.E.2d at 762. Thus, Wood I remains controlling law. And there was no secret waiver

of subrogation in this case; unnamed defendant Erie’s settlement agreement is in the

record on appeal and referenced in several documents presented to the trial court.

We hold that unnamed defendant Erie’s waiver of its right to subrogation was

relevant and the trial court appropriately concluded that defendant Harward could

use unnamed defendant Erie’s payment to plaintiff as a credit against the jury verdict

judgment.

II.   Denial of Plaintiff’s Motion for Leave to Take Post-Verdict Depositions

      Plaintiff also argues that the trial court erred when it denied plaintiff’s motion

to take depositions of State Farm and unnamed defendant Erie representatives.

Specifically, plaintiff contends that “the trial court erred and abused its discretion

when [it] refused to permit Plaintiff to take post-judgment depositions of State Farm

and [unnamed defendant] Erie representatives to determine the facts and

[c]ircumstances concerning the waiver of subrogation.”

      Plaintiff filed a motion on 29 October 2015 to strike the affidavit of unnamed

defendant Erie’s counsel and moved for leave of the trial court to take post-verdict

depositions of “appropriate Erie and State Farm personnel and their agents to

determine the facts and circumstances concerning the purported waiver of

subrogation by Erie and including but not limited to whether State Farm agreed not

to tender its policy limits in exchange for a waiver of subrogation by [unnamed

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                                 HAIRSTON V. HARWARD

                                   Opinion of the Court

defendant Erie] . . . .” The trial court concluded that “Plaintiff’s motion to take post-

verdict depositions is, in the Court’s discretion, denied at this time[.]”

      A motion to take a deposition is a discovery order, and “our review of a trial

court’s discovery order is quite deferential: the order will only be upset on appeal by

a showing that the trial court abused its discretion.” Isom v. Bank of Am., N.A., 177
N.C. App. 406, 410, 628 S.E.2d 458, 461 (2006). “The abuse of discretion standard is

intended to give great leeway to the trial court and a clear abuse of discretion must

be shown.” Hill v. Hill, 173 N.C. App. 309, 315, 622 S.E.2d 503, 508 (2005) (citation

and quotation marks omitted).

      Plaintiff claims that the waiver of subrogation was not disclosed until after the

jury verdict in August 2014, but the waiver of subrogation was not relevant to the

jury’s verdict. The jury verdict simply found that plaintiff was injured by defendant

Harward’s negligence and set the amount of damages plaintiff could recover from

defendant Harward. The waiver of subrogation was disclosed in affidavits before the

trial court ruled on plaintiff’s motion for post-verdict depositions. The majority of

plaintiff’s arguments on this issue suggest collusion and conspiracy between various

insurance providers. Plaintiff once again argues that this Court should consider the

public policy impact of such claims of collusion or conspiracy, but as noted above,

there is no legal remedy available here. Again, many of the same arguments were

raised before our Supreme Court in the Wood II appeal, and the Supreme Court,

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                               HAIRSTON V. HARWARD

                                  Opinion of the Court

issuing a per curiam decision, declined to address those issues further. See Wood,
368 N.C. at 30, 771 S.E.2d at 762. It is the role of the General Assembly to address

any public policy implications for this sort of potential “collusion” between insurance

companies.   We therefore hold that the trial court did not abuse its discretion.

                                     Conclusion

      We conclude that the trial court did not err when it allowed defendant Harward

to setoff and receive a credit against the tort judgment for the $145,000.00 payment

plaintiff received from unnamed defendant Erie. We further find that the trial court

did not abuse its discretion when it did not permit plaintiff to conduct depositions of

defendant’s insurer, State Farm, and unnamed defendant Erie’s representatives.

      AFFIRMED.

      Judge DAVIS concur.

      Judge HUNTER, JR. dissents in separate opinion.

                                         - 15 -
 No. COA16-570 – Hairston v. Harward

       HUNTER, JR., Robert N., Judge, dissenting in a separate opinion.

       I respectfully dissent from the majority’s holding the trial court did not err in

crediting Plaintiff’s judgment against Defendant with the UIM benefits Plaintiff

received from unnamed Defendant Erie.

       The majority concluded this Court’s opinion in Wood v. Nunnery, 222 N.C. App.
303, 730 S.E.2d 222 (2012) is distinguishable from the instant case since unnamed

Defendant Erie waived its right to subrogation.       This distinction is not outcome

determinative since Plaintiff’s recovery in Wood, like the Plaintiffs’ recovery in this

case, is based on a jury verdict finding Defendant’s negligence responsible for

Plaintiff’s injuries.

       The language in Wood which the majority relies upon is obiter dictum:

                     Since Firemen’s paid $202,627.58 into the office of
              the Clerk of Court for Forsyth County, and not to plaintiff
              directly, there would have been no “assignment” or
              subrogation receipt executed by plaintiff to Firemen’s.
              However, under subsection (b) of [N.C. Gen. Stat. § 20-
              279.21 (2011)], Firemen’s would be subrogated to plaintiff’s
              right against defendant to the extent of its payment
              ($202,627.58).     Because of this statutory right of
              subrogation, defendant cannot be entitled to a credit
              against the judgment for payments made by Firemen’s as
              a UIM carrier. Since no party has raised the issue of
              whether Firemen’s is estopped from seeking subrogation
              from defendant by adopting defendant’s brief, we do not
              address that issue.

Id. at 307, 730 S.E.2d at 225.
                                     HAIRSTON V. HARWARD

                         HUNTER, JR., J., dissenting in a separate opinion

       The facts in Wood are essentially identical to the case at bar. In Wood this

Court recognized the trial court “conflated the concepts of the amounts owed by

defendant as the tortfeasor” and the amount owed by the UIM:

               Plaintiff instituted this action against defendant, seeking
               monetary damages for personal injuries proximately
               caused by the negligence of defendant. . . . The trial court
               entered judgment against only defendant. This judgment
               was based upon defendant’s negligence and was a tort
               recovery.
                     The liability of [the UIM] is based in contract, not in
               tort.

Id. at 305-06, 730 S.E.2d at 224. Here, as in Wood, Defendant’s tort liability is a

separate entity from unnamed Defendant Erie’s contractual obligation. Plaintiff

contracted with unnamed Defendant Erie and purchased underinsured motorist

coverage. Even though unnamed Defendant Erie is now released from its contractual

liability to Plaintiff, this does not mean Defendant is released from the $263,000.00

judgment he owes Plaintiff.3

       Additionally, N.C. Gen. Stat. § 20-279.21(b)(4) pertains to UIM coverage and

is part of the Financial Responsibility Act of 1953. This statute provides for UIM

coverage to apply when a Defendant’s liability policy is exhausted.                   Id. As the

consideration for the payment of policy limits, the injured party may execute a

covenant not to enforce a judgment against a tortfeasor. Id. The effect of this allows

       3  Assume a person murders a man with a substantial life insurance policy. Under the
majority’s analysis, would the murderer would be entitled to a credit for the victim’s life insurance
proceeds?

                                                 2
                                 HAIRSTON V. HARWARD

                      HUNTER, JR., J., dissenting in a separate opinion

a plaintiff to proceed against separate defendants, or to proceed with claims for

benefits under the applicable UIM coverage. Id.

      The pertinent statutory provision provides:

                     As consideration for payment of policy limits by a
             liability insurer on behalf of the owner, operator, or
             maintainer of an underinsured motor vehicle, a party
             injured by an underinsured motor vehicle may execute a
             contractual covenant not to enforce against the owner,
             operator, or maintainer of the vehicle any judgment that
             exceeds the policy limits. A covenant not to enforce
             judgment shall not preclude the injured party from
             pursuing available underinsured motorist benefits, unless
             the terms of the covenant expressly provide otherwise, and
             shall not preclude an insurer providing underinsured
             motorist coverage from pursuing any right of subrogation.

N.C. Gen. Stat. § 20-279.21(b)(4) (2016). This statute provides no language stating

that a tortfeasor is entitled to a credit from a plaintiff’s UIM insurer. There is also

no language stating a tortfeasor has a right to avoid the enforcement of a judgment.

Rather, this statute reveals the North Carolina public policy of an injured party’s

right to either enforce or not enforce a judgment against a tortfeasor: when the policy

limits of the tortfeasor’s liability insurer have been paid, an injured party may, at his

option, covenant to forego his right to enforce a judgment under the statute.

      Unnamed Defendant Erie waived its statutory right of recovery. This action

only affects Erie. Unnamed Defendant Erie’s agreement to waive subrogation from

Plaintiff does not bar Plaintiff’s right to seek satisfaction of the judgment against

Defendant. Nothing under N.C. Gen. Stat. § 20-279.21(b)(4) provides Plaintiff with

                                             3
                                   HAIRSTON V. HARWARD

                        HUNTER, JR., J., dissenting in a separate opinion

a “double recovery” in this case just because Erie abandoned its right to recovery. The

fact Erie elected to not pursue its legal right to subrogation is immaterial to Plaintiff’s

right to have his judgment against Defendant satisfied by Defendant. To apply

Plaintiff’s UIM benefits as a credit against the judgment results in an improper

windfall for Defendant.

          The operative statue balances the interests of the tortfeasor, its liability

insurer, the injured victim and the UIM insurer.              Under N.C. Gen. Stat. § 20-

279.21(b)(4) the liability insurer must seek resolution of the claim within its policy

limits.     Here, the liability carrier protects its insured and is released from any

obligation to participate in the defense of the injured victim’s claim. At the same

time, the statute also provides opportunities for the UIM to recoup the payments

made to its insured. This way the statute protects UIM’s interests as well as the

victim’s contractual rights. The UIM has the right of subrogation when it honors its

contractual obligations towards its insured. It also fulfills the purpose of the UIM

provision of the Financial Responsibility Act as it serves “to compensate innocent

victims injured by financially irresponsible motorists.” Wilmoth v. State Farm Mut.

Auto Ins. Co., 127 N.C. App. 260, 264, 488 S.E.2d 628, 631 (1997). If a tortfeasor

receives credit for UIM payments, the statutory right of subrogation is meaningless,

and this upsets the statutory balance among competing interests.

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           HAIRSTON V. HARWARD

HUNTER, JR., J., dissenting in a separate opinion

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