Court Opinion

ID: 9573363
Source: CourtListenerOpinion
Date Created: 2023-08-21 20:53:26.613114+00
Date Added: 2024-06-11T12:35:11.399721
License: Public Domain

GREENE, Judge.
Roy E. Baggett (Mr. Baggett) and Patricia Baggett (Mrs. Baggett) (collectively, Plaintiffs), individually and d/b/a Boutique House-Port of Swansboro, appeal an order filed 7 February 2000 granting a motion for summary judgment in favor of Summerlin Insurance and Realty, Inc. (the Summerlin Agency) and Charles W. Summerlin, Jr. (Summerlin) (collectively, Defendants).1
Plaintiffs have owned the Boutique House, a ladies clothing store in Jacksonville, since 1981. Jamie D. McGlaughon (McGlaughon), of the Bailey Insurance and Realty Company, provided commercial insurance coverage on the Boutique House from May 1990 until July 1993 and then again from July 1996 until the present. The coverage *45for the Boutique House included coverage for: the building in the amount of $122,500.00; business personal property in the amount of $100,000.00; loss of income, money and securities, exterior signs and glass; and business liability in the amount of $1,000,000.00. The policy McGlaughon provided Plaintiffs was an “all-risk coverage” policy which specifically excluded flood coverage. In fact, McGlaughon stated in his deposition testimony that most commercial policies excluded flood coverage and clients would have to obtain separate coverage for flood insurance.
In a deposition taken 25 November 1998, Mrs. Baggett testified that in 1993 Summerlin asked to look at the insurance policy Plaintiffs had with McGlaughon so Summerlin could provide Plaintiffs with a proposal for a policy with the Summerlin Agency. It was Plaintiffs’ understanding that Summerlin was proposing coverage on the Boutique House equivalent to what Plaintiffs had with McGlaughon. Summerlin gave Plaintiffs an insurance quote providing for coverage at a less expensive annual premium than the amount Plaintiffs were paying to McGlaughon. Plaintiffs canceled McGlaughon’s coverage of the Boutique House and procured coverage with the Summerlin Agency. Plaintiffs never indicated to McGlaughon they were getting greater property insurance coverage with the Summerlin Agency than with McGlaughon, only that they were getting less expensive coverage. In fact, it was Mrs. Baggett’s understanding that Summerlin was providing her with coverage equivalent to what she had with McGlaughon.
The Summerlin Agency provided Plaintiffs with an “all-risk coverage” policy (the Summerlin Policy). The Summerlin Policy provided coverage for: the building in the amount of $122,500.00; business personal property in the amount of $150,000.00; general liability in the amount of $1,000,000.00; medical expenses in the amount of $5,000.00 per person; and fire legal liability in the amount of $100,000.00. When asked if the Summerlin Policy included peak inventory coverage, Summerlin told Plaintiffs that they had “an all-risk coverage. That’s all [they] would need.” The Summerlin Policy, however, specifically excluded flood coverage and provided:
1. We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss.
*46g. Water
(1) Flood, surface water, waves, tides, tidal waves, overflow of any body of water, or their spray, all whether driven by wind or not....
Summerlin stated in his affidavit that he did not tell Mrs. Baggett he would procure flood insurance for the Boutique House and recalled “pointing out to [Mrs.] Baggett in a conversation,” near the time he sought to procure insurance on the Boutique House, “that the coverage of any insurance policy is limited by exclusions set forth in the policy and that the exclusion for loss caused by flood and earthquake is a standard exclusion.”
Mrs. Baggett stated she did not have flood insurance on the Boutique House in Jacksonville and she never asked Summerlin to procure flood insurance on the Boutique House. Mrs. Baggett was satisfied the Summerlin policy provided her with identical coverage as that provided by McGlaughon at a cheaper rate.
From July 1993 through July 1996, Plaintiffs received several renewal notices for the Summerlin Policy. Each time Plaintiffs received the renewal notice, they paid the premium without questioning Summerlin on the coverage. During the 1994/1995 policy coverage period, Summerlin advised Mrs. Baggett she “would be receiving a Notice of Cancellation of the insurance coverage .... He advised [her] not to worry about it[,] ... he would place the coverage with some other company . . . [because] he was no longer doing business with the company which had previously written [Plaintiffs’] coverage.”
In August 1995, Plaintiffs entered into a lease of a building to operate a ladies and children clothing store in Swansboro (the Boutique House-Port). Mrs. Baggett telephoned Summerlin and informed him of her lease of the Boutique House-Port and the requirement she have $250,000.00 of liability insurance, but that she did not “know if there’s anything else [she] need[ed].” Summerlin stated he knew the location of the Boutique House-Port and was aware it was near the White Oak River. According to Mrs. Baggett, Summerlin told her he would provide “the necessary coverage.” Summerlin procured the additional liability coverage as requested by Mrs. Baggett and did not offer Mrs. Baggett any other coverage. In August 1995, Mrs. Baggett received a two-page amendment adding the Boutique House-Port to the Summerlin Policy. Mrs. Baggett stated she did not have any conversation with Summerlin about flood coverage.
*47In July 1996, as Hurricane Bertha was near Puerto Rico, Mrs. Baggett telephoned Summerlin and informed him that Hurricane Bertha was “down off the coast of Puerto Rico” and asked “if that thing comes, [is the Boutique House-Port] going to be covered down there on that water front.” Summerlin responded, “ ‘well, maybe you will or maybe you won’t.’ ” After asking Summerlin what he meant by his statement and informing him that she had a lot of inventory at the Boutique House-Port, Summerlin told Mrs. Baggett “ ‘it’s got a woman’s name, so it’s not going to be much to it.’ ” Mrs. Baggett did not inquire further and ended her conversation with Summerlin. Summerlin never gave Mrs. Baggett any assurance that the Boutique House-Port would be fully covered and she never discussed with Summerlin moving any of her inventory from the Boutique House-Port.
On 12 July 1996, Plaintiffs rented a truck to move the inventory from the Boutique House-Port, however, rising waters from the White Oak River and the Intracoastal Waterway prevented Plaintiffs from moving the inventory. Hurricane Bertha caused severe damage to the Boutique House-Port’s interior and its fixtures and ruined most of Plaintiffs’ inventory. After inspecting the Boutique House-Port, Mr. Baggett went to Summerlin’s office to explain that the Boutique House-Port had flooded and asked Summerlin what Plaintiffs should do. Summerlin told Mr. Baggett to “ ‘go ahead and act just like [Plaintiffs didn’t] have [any] insurance or anything.... Go down there and clean the mess up. . . . Take the carpet out, do whatever you got to do to try to sacrifice the merchandise you can.’ ” Mr. Baggett asked Summerlin if he should wait until after an insurance adjuster looked at the Boutique House-Port before cleaning the store. Summerlin told Mr. Baggett to go ahead and start cleaning and he would get an insurance adjuster to the Boutique House-Port as soon as possible. An insurance adjuster came to the Boutique House-Port a few days later and took pictures. A week later, the insurance adjuster informed Plaintiffs the Summerlin Policy did not cover the damage done to the Boutique House-Port. Mr. Baggett read the Summerlin Policy and discovered it was an “all-risk policy” and went to Summerlin to inquire about the coverage. Summerlin confirmed the Boutique House-Port was not covered for flood damage.
At no time during the period Plaintiffs had the Summerlin Policy did Plaintiffs ask Summerlin to procure flood coverage and Summerlin did not indicate to Plaintiffs they had flood coverage. According to Defendants’ telephone call sheet, Mrs. Baggett stated *48she did not want sign, glass, or flood coverage for the Boutique House-Port. Summerlin also stated that as Hurricane Bertha approached, he reminded Mrs. Baggett she did not have flood coverage.
After learning the Summerlin policy did not cover the Boutique House-Port for flood damage, Plaintiffs canceled their insurance with Summerlin on 17 July 1996. On 2 January 1998, Plaintiffs filed a complaint alleging Defendants: negligently failed to procure flood insurance on the Boutique House-Port; did not timely notify Plaintiffs of their failure to obtain flood insurance; breached their contract; and committed unfair and deceptive trade practices.2 Defendants filed a motion for summary judgment on 12 August 1999 and the trial court granted Defendants’ motion.
The issues are whether: (I) an agent, by making a promise to a customer to obtain “the necessary coverage” on a building located near the White Oak River, undertakes a duty to obtain flood insurance; and (II) Plaintiffs were negligent in not reading the Summerlin Policy.
I
Plaintiffs argue a genuine issue of material fact exists as to whether Defendants, by assuring Plaintiffs they would provide “the necessary coverage,” assumed a duty to obtain flood insurance for Plaintiffs.
An insurance agent, who undertakes an obligation to procure an insurance policy for a customer, has a duty to procure that insurance and will be held liable (in negligence) for any damage resulting from a breach of that duty. Barnett v. Security Ins. Co. of Hartford, 84 N.C. App. 376, 378, 352 S.E.2d 855, 856-57 (1987). Communications between a customer and an agent, as well as their conduct, are relevant on the question of whether the agent has undertaken to procure a policy of insurance. Alford v. Tudor Hall and Assoc. Inc., 75 N.C. App. 279, 282, 330 S.E.2d 830, 832, disc. review denied, 315 N.C. 182, 337 S.E.2d 855 (1985). For example: if the communications and/or conduct “ ‘lull the [customer] into the belief that such insurance has been effected, the law will impose upon the . . . agent the obliga*49tion’ ” to procure the insurance. Id. (citation omitted). For another example: “if the parties have had prior dealings where the agent customarily has taken care of the customer’s needs without consultation,” then a legal duty can arise to procure the insurance, even “without express and detailed orders from the customer and acceptance by the agent.” Id.
In this case, the evidence viewed in the light most favorable to Plaintiffs, see Wrenn v. Byrd, 120 N.C. App. 761, 763, 464 S.E.2d 89, 90 (1995) (must view evidence in light most favorable to non-moving party on motion for summary judgment), disc. review denied, 342 N.C. 666, 467 S.E.2d 738 (1996), reveals substantial evidence Summerlin assumed an obligation to procure flood insurance on the Boutique House-Port property.3 Summerlin was aware of the location of the property and advised Mrs. Baggett he would provide her with “the necessary coverage.” Throughout the relationship of the parties, Summerlin had taken care of Mrs. Baggett’s insurance needs, including placing Plaintiffs’ coverage with another company when he was no longer doing business with the company which had previously written Plaintiffs’ coverage. Summerlin specifically told Plaintiffs they had “all-risk” coverage, which was all they needed. Accordingly, a genuine issue of fact exists and the trial court erred in granting summary judgment for Defendants on this basis.4
II
Defendants argue, in the alternative, Plaintiffs were contributorily negligent and, thus, barred from any recovery because they failed to read the Summerlin Policy which specifically excluded any coverage for flood damage.
A person who signs a contract generally has a duty to read it and become knowledgeable of its contents and is negligent if he fails to do so. Elam v. Smithdeal Realty & Ins. Co., 182 N.C. 600, 603, 109 S.E. 632, 634 (1921). If, however, a person of reasonable business pru*50dence would have been misled or placed off his guard, the failure to read the contract does not constitute negligence. Id.; see R-Anell Homes, Inc. v. Alexander & Alexander, Inc., 62 N.C. App. 653, 659, 303 S.E.2d 573, 577 (1983) (a jury could “find that [a] plaintiffs reliance on [a] defendant’s presumably superior knowledge of the insurance business was reasonable, and [the] plaintiff was not con-tributorily negligent” in failing to read an insurance policy).
In this case, there is no indication Plaintiffs read the Summerlin Policy as it pertained to coverage and exclusions on the Boutique House-Port. The statement of Summerlin that he would provide Plaintiffs with “the necessary coverage,” taken in the context of the prior relationship Plaintiffs had with Summerlin, and the latter’s knowledge of the location of the property near the White Oak River, however, is sufficient evidence to support a conclusion that a reasonably prudent person would not have read the insurance contract and, thus, not have seen the explicit flood exclusions. Thus, a genuine issue of fact exists and summary judgment cannot be supported on this basis.
Reversed and remanded.
Judge JOHN concurs.
Judge TYSON dissents.

. We note Plaintiffs voluntarily dismissed the action against Charles W. Summerlin and Charles W. Summerlin, Jr. d/b/a Summerlin Insurance Center and Charles W. Summerlin, individually.

. Plaintiffs have presented no argument in their brief to this Court concerning their allegations of breach of contract or unfair and deceptive trade practices. Accordingly, we do not address whether summary judgment was properly granted on these claims.

. “Summary judgment is proper where there is no genuine issue as to any material fact.” Johnson v. Trustees of Durham Technical Community College, 139 N.C. App. 676, 680, 635 S.E.2d 357, 361, appeal dismissed and disc review denied, 353 N.C. 265, - S.E.2d - (2000); N.C.G.S. § 1A-1, Rule 56 (1999). “An issue is genuine where it is supported by substantial evidence.” Johnson, 139 N.C. App. at 681, 535 S.E.2d at 361.

. As there is no dispute in this record that Summerlin was the agent of the Summerlin Agency in his transactions with Mrs. Baggett, summary judgment must be reversed as to both Defendants.