Court Opinion

ID: 804979
Source: CourtListenerOpinion
Date Created: 2012-07-23 19:30:24+00
Date Added: 2024-06-11T18:00:14.159668
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                             No. 12-1021

PROGRESSIVE SOUTHEASTERN INSURANCE COMPANY,

                Plaintiff - Appellee,

          v.

WILLIAM W. MCLEOD, Administrator of the Estate of
   Annie Morgan McLeod; KARON MCLEOD,

                Defendants - Appellants.

Appeal from the United States District Court for the District of
North Carolina, at Wilmington.     David W. Daniel, Magistrate
Judge. (7:08-cv-00161-DAN)

Submitted:   June 18, 2012                 Decided:   July 23, 2012

Before GREGORY, AGEE and FLOYD, Circuit Judges.

Affirmed by unpublished per curiam opinion.

Maynard M. Brown, JOHNSON & LAMBETH, Wilmington, North Carolina,
for Appellants. Glenn C. Raynor, YOUNG MOORE AND HENDERSON, PA,
Raleigh, North Carolina, for Appellee.

Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:

                                                  I.

            Annie McLeod, the daughter of Appellees William and

Karen McLeod (“Mr. and Mrs. McLeod”), sustained fatal injuries

in March of 2008 when her car was struck by another vehicle.

Because the driver of the other vehicle, Kevin Cardwell, did not

have   liability           coverage      that     applied      to    the        accident,    he

qualifies as an “uninsured motorist” under North Carolina law.

See N.C. GEN. STAT. § 20-279.21(b)(3).                      Mrs. McLeod was the named

insured    of    a    policy    underwritten           by   Progressive          Southeastern

Insurance       Company.        The      policy        provides     combined        uninsured

(“UM”) and underinsured (“UIM”) bodily injury coverage limits of

$50,000 per accident and $100,000 per accident, respectively.

            At       the    time    of      the   accident,         North       Carolina    law

required    that       an     insurance         carrier      provide       an     insured    an

opportunity to select or reject UM/UIM coverage in an amount

greater than $50,000 per person and $100,000 per accident; it

further     required         that     the    insurance        company       document        that

opportunity via a form promulgated by the North Carolina Rate

Bureau, which was to be signed by the insured.                              N.C. GEN. STAT.

§§ 20-279.21(b)(3) & (4) (2000).                       Progressive cannot locate a

signed copy of that form for Mrs. McLeod’s policy.

                                                   2
             Progressive filed this action pursuant to the federal

court’s diversity jurisdiction seeking a declaratory judgment

that    it    is    required     to     pay       only   up    to   the     combined

$50,000/$100,000 UM/UIM coverage provided by the policy.                           The

McLeods assert in their answer that Progressive must provide

coverage up to $1,000,000.            They rely on a decision by the North

Carolina Court of Appeals, Williams v. Nationwide Mut. Ins. Co.,

621 S.E.2d 644 (N.C. Ct. App. 2005), where that court held that

a “total failure” to provide an insured with an opportunity to

select or reject UIM coverage of a certain amount would compel a

court to declare that the UIM coverage limit must be raised to

$1,000,000, the maximum amount permissible under state law.                        Id.

at 647.      After a bench trial, the magistrate judge rejected this

interpretation of North Carolina law, holding that an earlier

decision      by    the   state’s     Supreme       Court,     Nationwide     Mutual

Insurance     Co.    v.   Fortin,      513    S.E.2d     782    (N.C.     1999),    is

inconsistent with Williams.             It held that Progressive is only

obligated to provide UM coverage up to the bodily injury limits

of the policy, and entered a judgment in Progressive’s favor.

The McLeods timely appeal.

                                                  II.

             We dispense with oral argument because the facts and

legal   contentions       are   adequately        presented    in   the    materials

                                              3
before   the   court    and     argument       would      not    aid    the   decisional

process.       We    hold     that     there       was    no    “total      failure”   by

Progressive     to    provide     Mrs.   McLeod          with    the    opportunity    to

reject or select UM coverage and therefore affirm the magistrate

judge’s decision.

                                                   A.

            Judgments following a bench trial are reviewed under a

mixed standard:         “[F]actual findings may be reversed only if

clearly erroneous, while conclusions of law . . . are examined

de novo.”      Roanoke Cement Co. v. Falk Corp., 413 F.3d 431, 433

(4th Cir. 2005).

            The legal issue raised in this appeal concerns the

proper interpretation of North Carolina law.                           While sitting in

diversity, the federal courts are not bound by the precedent of

intermediate        appellate     courts,       but       must        adjudicate   legal

questions consistent with the precedent of the state’s highest

court and, if no such precedent exists, predict how the state’s

highest court would rule if presented with the issue.                          Wells v.

Liddy, 186 F.3d 505, 527-28 (4th Cir. 1999).                          At the same time,

this   Court   has     held     that   “[a]n       opinion       of    an   intermediate

appellate court is persuasive in situations where the highest

court of the state has not spoken,” although the intermediate

court’s opinion “does not prevail where the federal court is

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convinced that the highest court of the state would rule to the

contrary.”      Sanderson      v.    Rice,   777      F.2d     902,   905   (4th    Cir.

1985).

                                                 B.

           At     the   time   the    McLeods’        policy    was   issued,      North

Carolina law provided that UM coverage is “not to be less than

the   financial    responsibility       amounts        for   bodily    injuries      set

forth in G.S. 20-279.5 nor greater than one million dollars

($1,000,000), as selected by the policy owner.”                       N.C. GEN. STAT.

§ 20-279.21(b)(3) (2002).            The law also permitted an insured to

reject this coverage.          Id.    However, “rejection of or selection

of different coverage limits for uninsured motorist coverages

. . . shall be made in writing by a named insured on a form

promulgated by the Bureau and approved by the Commissioner of

Insurance.”       Id.    Finally, “[i]f the named insured does not

reject uninsured motorist coverage and does not select different

coverage limits, the amount of underinsured motorist coverage

shall be equal to the highest limit of bodily injury liability

coverage for any one vehicle in the policy.”                          N.C. GEN. STAT.

§ 20-279.21(b)(3) (2002).*

      *
       The purpose of this rather tangled series of legislative
pronouncements is nicely summarized in Hendrickson v. Lee, 459
S.E.2d 275, 279 (N.C. Ct. App. 1995):       “Thus, although an
(Continued)
                                             5
            In this case the parties agree that Progressive was

obligated   to   give    Mrs.   McLeod   the    option      of    rejecting    or

selecting   additional    UM    coverage.      Br.   of     Appellee     at   3-5.

However,    Progressive    cannot   produce     a    copy    of    the   Bureau-

approved document signed by Mrs. McLeod.             Because the burden of

proof to demonstrate that an insured signed the form rests with

the insurance carrier, Hendrickson v. Lee, 459 S.E.2d 275, 279

(N.C. App. 1995), Progressive does not dispute the magistrate

judge’s finding that no selection/rejection form was ever signed

by Mrs. McLeod.    Thus the only issue in dispute is the level of

UM coverage provided by North Carolina law in cases where the

insured failed to comply with § 20-279.21(b)(3).

            This dispute centers on the proper interpretation of

two seemingly conflicting opinions:            an earlier decision from

the North Carolina Supreme Court and a later one issued by the

North Carolina Court of Appeals.         In State Farm v. Fortin, North

Carolina’s Supreme Court held that the insurer failed to provide

an adequate opportunity for its insured to reject or select

additional UIM coverage.        513 S.E.2d at 784.          It then turned to

address the amount of UIM coverage provided by the policy given

insured is not legally obligated to contract for [UM] coverage
in any amount, [UM] coverage equal to a policy’s liability
limits will be assumed unless the insured validly rejects that
amount of coverage.” Id. (citations omitted).

                                         6
this failure and held, pursuant to the plain language of the

statute,      that        “[i]f    the      named       insured        does    not   reject

underinsured        motorist      coverage     and      does    not     select    different

coverage limits, the amount of . . . coverage shall be equal to

the highest limit of bodily injury liability coverage for any

one    vehicle     in     the   policy.”       Id.       at    786.      In    Williams    v.

Nationwide Mutual Insurance Co., the North Carolina Court of

Appeals considered a fact pattern highly analogous to Fortin.

There,    the      insurer      stipulated     that      it    had     not    provided    the

insured with an opportunity to reject or select additional UIM

coverage.          621    S.E.2d     at     645.         Rather       than    applying    the

straightforward           language     of    § 20-279.21(b)(3),               however,    the

Williams Court created a new rule out of whole cloth, holding

that because there was a “total failure” to provide the insured

with    the     opportunity       to     select        coverage,       “the    insured    was

entitled      to    the    highest     available        limit     of    UIM    coverage    of

$1,000,000.”        Id. at 647.

              It is an open question whether the Williams rule is

good law in North Carolina.                  On the one hand, § 20-279.21 is

clear on its face that the Fortin rule governs all cases where

there is a failure to provide the opportunity to select coverage

-- the Fortin decision itself noted the statute was unambiguous.

Fortin, 513 S.E.2d at 785-86.                  Moreover, Fortin considered and

rejected an appellate court decision -- interpreting an earlier

                                                   7
version of the same statute -- that held the $1,000,000 limit

applied.    Id. at 784-85.          On the other hand, it is logically

possible   to   interpret     Williams    and    Fortin   so     that    they    are

consistent: in Fortin the insured provided an opportunity to

select coverage, but failed to do so in the manner dictated by

the statute.     Id. at 783.        In Williams, by contrast, the parties

stipulated that “[n]either [of the insureds] were offered by

Nationwide or its authorized agent an opportunity to select or

reject   UIM    limits    . . . .”       Williams,    621      S.E.2d    at     645.

Further, the Williams court noted a policy concern that would

justify this reading:         if the remedial section of the statute

applied in “total failure” cases, “insurers would be permitted

to establish default UIM coverage simply by failing to provide

the proper rejection/selection forms to their clients.”                    Id. at

647.

           Unfortunately,       while     the     court     of    appeals       has

interpreted     the      Williams    decision,     see,     e.g.,       Nationwide

Property & Casualty Ins. Co. v. Martinson, 701 S.E.2d 390 (N.C.

Ct. App. 2010); N.C. Farm Bureau Mut. Ins. Co. v. Jenkins, 700

S.E.2d 434 (N.C. Ct. App. 2010), the North Carolina Supreme

Court has not taken up the issue.             Thus there is no definitive

statement on this area of law that binds this Court.                          Rather

than resolving this difficult state-law question one way or the

                                          8
other, we affirm the magistrate judge’s decision on alternative

grounds.

                                                   C.

              Assuming      arguendo   that        the    Williams    rule      is       still

viable, Progressive did not commit a total failure in providing

Mrs. McLeod with the chance to select UM coverage.                         We therefore

affirm the district court.

              The   magistrate     judge      made       several    findings     of       fact

supporting this conclusion.              The court first noted that when

Mrs. McLeod signed the insurance policy, she acknowledged and

agreed        to       a       statement           which       read        in            part,

“Uninsured/Underinsured Motorists Coverage, and the applicable

limits   of    these       coverages   were    explained       to    me,   and       I   have

selected the limits shown.”             The court further found that when

she was purchasing car insurance she wished to “keep costs down

by choosing the lowest required coverage and understood that

greater combined UM/UIM coverage limits would have resulted in

higher     premiums.”            Finally,      the        court     determined            that

“subsequent to the accident, the McLeods continued to renew the

Policy at the same policy limits . . . despite being on notice

since at least the time that the complaint was filed in this

action of their ability to select or reject different coverage

limits.”      These facts, taken together, lead us to conclude that

                                               9
the Williams “total failure” rule is inapplicable to this case

and that the magistrate did not err in holding, consistent with

Fortin, that the McLeods are entitled only to coverage in an

amount “equal to the highest limit of bodily injury liability

coverage for any one vehicle in the policy.”     Fortin, 513 S.E.2d

at 786.

                                III.

          For   the   reasons   discussed   above,   we   affirm   the

magistrate judge’s decision.

                                                             AFFIRMED

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