Court Opinion

ID: 9594842
Source: CourtListenerOpinion
Date Created: 2023-08-22 00:33:23.617434+00
Date Added: 2024-06-11T09:40:29.819732
License: Public Domain

Justice MEYER
dissenting.
Believing that the majority has erred on both issues it addresses, I respectfully dissent.
The majority clearly concedes (1) that N.C.G.S. § 20-279.21, which defines “motor vehicle liability policy,” is silent as to the issue of prejudgment interest; and (2) that the prejudgment interest statute, N.C.G.S. § 24-5, is not a part of the Financial Responsibility *15Act and thus is not written into the policy in question.1 It follows that any obligation of Nationwide to pay prejudgment interest is governed entirely by, and only by, its contract of insurance with its insured.
The majority concludes that Nationwide’s obligation under its UIM coverage to pay “damages” that its insured is entitled to recover from the tort-feasor includes prejudgment interest. I disagree.
Part D of the Nationwide policy, as well as a subsequent endorsement, both pertaining to uninsured/underinsured motorists’ coverage, provide that Nationwide
will pay damages which a covered person is legally entitled to recover from the owner or operator of an uninsured motor vehicle because of:
1. Bodily injury sustained by a covered person and caused by an accident; and
2. Property damage caused by an accident.
(Emphasis added.) Under the plain language of the UIM coverage provisions, Nationwide’s obligation is limited to paying damages suffered by reason of bodily injury and property damage. Interest cannot be said to arise from bodily injury or property damage. No supplemental payment provisions are found under Part D of the policy. Thus, Part D of plaintiff’s policy constituting uninsured/underinsured coverage clearly does not contain any provision requiring Nationwide to pay the costs of interest or defense costs.
The issue of whether préjudgment interest is included in the term “damages” has been examined by the United States Tax Court in Aames v. Commissioner, 94 T.C. 189 (1990). Though Tax Court decisions are, of course, not binding on this Court, the reasoning of those decisions can be informative and sometimes persuasive. Section 104(a)(2) of the Tax Code excludes from gross income “the amount of any damages received ... on account of personal injuries *16or sickness.” 26 U.S.C.S. § 104(a)(2) (Law. Co-op. Supp. 1992). In that case, Mr. Aames did not report the prejudgment interest awarded to him in a malpractice action, asserting the provisions of section 104. The Tax Court held that the prejudgment interest was taxable and did not come within the term “damages” under section 104. Aames, 94 T.C. at 189. The Tax Court noted that a statute in the taxpayer’s state of Massachusetts entitled him to “interest as an item of damages,” id. at 192, but nevertheless held that it was not “ ‘damages received ... on account of personal injuries,’ ” id. at 192 (quoting 26 U.S.C.S. § 104(a)(2)). This is virtually the same as the language of Nationwide’s policy here.
If the contract relating to UIM coverage was intended to cover prejudgment interest, it would have included language well known and customarily used in contracts of insurance to accomplish that purpose. For instance, Part B of the Nationwide policy here, which deals with liability coverage, in an amendatory endorsement (which, incidentally, is identical to the liability portion of Brown’s Allstate policy in the underlying tort action), contains a supplementary payments provision which provides that:
In addition to our limit of liability, we will pay on behalf of a covered person:
3. Interest accruing after any suit we defend is instituted. Our duty to pay interest ends when we pay our part of the judgment which does not exceed our limit of liability for this coverage.
Thus, under the supplementary payments provisions of the liability insurance section of the Nationwide policy promising to pay benefits in addition to the stated policy limits, there is a specific reference to “interest accruing after any suit ... is instituted” (prejudgment interest). This is the type of language employed when the intent is to pay prejudgment interest. I believe the majority errs in finding such an intent within a promise to pay “damages,” a very nonspecific term at best.
The majority should adhere in this case to the well-established rule that in interpreting policies of insurance, “courts must enforce the contract as written; they may not, under the guise of construing an ambiguous term [here, the term “damages”], rewrite the contract *17or impose liabilities on the parties not bargained for and found therein.” Woods, 295 N.C. at 506, 246 S.E.2d at 777 (emphasis added). Here, the language of plaintiffs UIM policy did not obligate Nationwide to pay prejudgment interest on the judgment in the underlying tort action.
The trial judge was correct in saying in the judgment that the payment of prejudgment interest falls on defendant Brown and her liability carrier. Brown paid premiums to her liability carrier to pay compensatory damages up to its policy limits and, in addition thereto, to provide a defense, to pay defense costs and interest on the judgment. Our statute, allowing a liability carrier to pay its liability coverage into court and be released, was never intended to release that carrier from its obligation to pay interest on the judgment taken against its insured, if doing so means placing that burden on the injured party’s UIM carrier. The premium for coverage of the interest was paid by the tort-feasor to her own liability carrier. If that expense is borne by the injured party’s UIM carrier, the tort-feasor loses the benefit of her bargaining with her liability carrier.
I also believe that the majority has erred in not allowing a credit for Nationwide’s previous payment of $10,000 under its medical payments coverage. First, the majority makes much of the fact that separate premiums were paid for the medical payments coverage. The separate premiums were paid, inter alia, for coverage of medical expenses even in the event they result from situations where the insured person has no liability for the event that caused them to be incurred. The fact that separate premiums were paid does not dictate that the contracting parties contemplated double payment of medical expenses to the extent of the medical payments coverage.
Second, and most important, the majority has completely overlooked the contract language relating to the limit of liability under the UIM coverage as it appears in “Part D Uninsured Motorists Coverage” of the Nationwide policy. The pertinent provision is as follows:
Limit op Liability
The limit of bodily injury liability shown in the Declarations for “each person” for Uninsured Motorists Coverage is our *18maximum limit of liability for all damages for bodily injury sustained by any one person in any one auto accident. . . .
Any amount otherwise payable for damages under this [uninsured] coverage shall be reduced by all sums:
1. Paid because of the bodily injury , . . by or on behalf of persons or organizations who may be legally responsible.
(Emphasis added.) This provision contemplates a credit against amounts due under the UIM coverages for any amount previously paid “for bodily injury” by Nationwide under its medical payments coverage. Such payments were paid by Nationwide “on behalf of” the tort-feasor because the tort-feasor’s coverage had been exhausted.
I vote to reverse the decision of the Court of Appeals and remand the case to that court for further remand to the Superior Court, Robeson County, for the entry of judgment as originally entered with regard to Nationwide’s liability for pre judgment interest and allowing Nationwide a credit for the $10,000 it previously paid plaintiff under its medical payment coverage.

. While acknowledging that N.C.G.S. § 24-5 is not a part of our Financial Responsibility Act and thus is not read into automobile insurance policies, it nevertheless spends several pages analyzing the provisions of that statute and the cases that interpret it in order to arrive at its conclusion that interest is to be treated as an element of compensatory damages.