Court Opinion

ID: 2733098
Source: CourtListenerOpinion
Date Created: 2014-09-16 12:04:13.31218+00
Date Added: 2024-06-11T15:46:34.589606
License: Public Domain

An unpublished opinion of the North Carolina Court of Appeals does not constitute
controlling legal authority. Citation is disfavored, but may be permitted in
accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of
A   p   p    e   l   l   a    t   e       P   r    o   c   e   d   u    r   e   .

                             NO. COA 14-226
                     NORTH CAROLINA COURT OF APPEALS

                         Filed: 16 September 2014

COUNTRY CAFAYE, INC., and
RODNEY BOOTH,
     Plaintiffs,

      v.                                    Stokes County
                                            No. 12 CVS 508
TRAVELERS CASUALTY
INSURANCE COMPANY OF AMERICA,
and WHITLEY INSURANCE
AGENCY, INC., d/b/a WHITLEY
REAVIS INSURANCE AGENCY,
     Defendants.

      Appeal by Plaintiffs from orders entered 19 August and 29

August 2013 by Judge Edgar B. Gregory in Stokes County Superior

Court.     Heard in the Court of Appeals 13 August 2014.

      J. Clark Fischer for Plaintiffs.

      Womble Carlyle Sandridge & Rice, by Philip J. Mohr and
      Garth   A.  Gersten,   for Defendant Travelers Casualty
      Insurance Co of America.

      McNair Law Firm, P.A., by Andrew W. Lax and Samuel I. Moss,
      for Defendant Whitley & Associates, Inc.1

1
  This defendant is erroneously denominated “Whitley Reavis
Insurance Agency” in the caption of this action. This defendant
has pointed out this error in its answer and motion for summary
judgment, but has not raised the incorrect party name as a legal
                                          -2-

    STEPHENS, Judge.

               Factual Background and Procedural History

    This       appeal    arises     from        an       action     alleging      improper

cancellation of an insurance policy and denial of coverage.                             The

facts before the trial court are as follows:

    Plaintiff         Rodney    Booth     was    the       owner     and    operator     of

Plaintiff      Country    Cafaye,       Inc.,        a    company     formed      for   the

operation of a casual dining restaurant located in King, North

Carolina.        In     2010,    Booth     obtained          a    general      commercial

liability insurance policy for Country Cafaye from Roy Whitley

of Defendant Whitley & Associates, Inc.                          Booth had previously

dealt with Whitley in connection with a policy insuring a radio

station owned by Booth’s parents, but managed by Booth.                                 The

policy for Country Cafaye was the first insurance policy which

Booth    had   purchased       directly    through         Whitley.         The    general

commercial     liability       insurance    policy         for    Country    Cafaye     was

issued   by    Defendant       Travelers    Casualty         Insurance       Company     of

issue in this litigation. Following the custom and practice of
this Court, we employ in the caption of our opinion the party
names exactly as they appear in the orders from which this
appeal is taken.
                                        -3-
America.      Booth    renewed   this    policy      in   November   2011   to   be

effective from 7 January 2012 through 7 January 2013.

      Booth opted to pay the premium for the insurance policy in

monthly installments of $290.90.              Bills for each premium payment

were sent out monthly by Travelers to the address for Country

Cafaye stated on the insurance policy:                P.O. Box 1172, King, NC

27021.     Premium payments were due on the seventh of each month.

Plaintiffs    paid    the   premiums    for     January    and   February   2012.

Each premium was paid after the due date, but was accepted by

Travelers.     A bill for the March premium dated 16 February 2012

was sent to and received by Plaintiffs.

      Plaintiffs and Travelers disputed the facts surrounding the

payment of the March 2012 premium and the mailing of a notice of

cancellation    to    Plaintiffs.       Plaintiffs        forecast   evidence     in

sworn affidavits from Booth and his employee, Faye Watts, that

on 16 March 2012 Booth wrote and signed a check from an account

in the name of Rodney T. Booth Enterprises, Inc., for payment of

the   March   2012    premium.      Booth     then   watched     Watts   mail    the

premium check with appropriate postage to Travelers from the

King Post Office.       Booth further stated in his affidavit that he

did not receive the notice of cancellation purportedly mailed by

Travelers.
                                          -4-
      Travelers forecast evidence showing that the March premium

check   Booth      allegedly     mailed    was       never   received.       Travelers

performed an “internal search for any checks written by Country

Cafaye or Booth or any affiliated entities,” but has been unable

to find any such check.               Travelers further produced documents

tending      to   show    that   it   mailed     a    notice    of    cancellation     of

Country Cafaye’s policy on 19 March 2012 to the address given on

the   policy,      P.O.    Box   1172,    King,      NC   27021.       The   notice    of

cancellation stated that Country Cafaye’s insurance policy would

be cancelled effective 8 April 2012 unless a minimum payment of

$581.80 was received by Travelers on or before 8 April 2012.

Plaintiffs did not make payment of $581.80 to Travelers on or

before 8 April 2012, although Booth did mail a check for the

regular April premium amount of $290.90 to Travelers on 19 April

2012.   Travelers received that check on 26 April 2012.

      On the evening of 19 April 2012, a grease fire destroyed

the restaurant owned by Plaintiffs.                   On the morning of 20 April

2012, Booth informed Roy Whitley of the fire and “catastrophic

damage” to the restaurant.            Roy Whitley told Booth that he would

speak   to    Travelers     regarding      a    claim     for   the    damage   to    the

restaurant.
                                         -5-
      That   afternoon,     Roy    Whitley     informed    Booth   that   Country

Cafaye’s insurance policy had been cancelled on 8 April 2012

because Travelers had purportedly not received the March premium

payment.     Whitley asserts that it was not aware of this notice

of cancellation until Roy Whitley found it on his desk on 20

April 2012.      Roy Whitley asked Booth if he had proof that the

March premium had been paid.             Booth was able to find and fax to

Whitley    the   check    stub    for    the   payment    purportedly     sent    to

Travelers in payment of the March premium.                Booth confirmed with

his bank that the check was never cashed.                    Travelers denied

coverage for damage to the restaurant on the basis that the

insurance policy had been cancelled as of 8 April 2012.

      On 20 April 2012, Travelers sent a bill to Country Cafaye

for   $150.20    representing      the    earned   premium    amount      for    the

period from 7 March through 8 April 2012.                  The bill stated in

multiple places that Country Cafaye’s insurance policy had been

cancelled as of 8 April 2012.             Booth paid the bill by check on

26 April 2012 using the payment coupon provided without paying

attention to the         textual statements in the bill.                Travelers

cashed both the 19 April 2012 check for $290.90 and the 26 April

2012 check for $150.20.           Travelers subsequently returned $290.90

to Country Cafaye on 21 May 2012.
                                        -6-
      On 27 July 2012, Plaintiffs filed this action alleging that

(1)   Whitley   breached     a     fiduciary        duty   to   Plaintiffs    and

committed professional malpractice and                (2) Travelers breached

the contract of insurance and was unjustly enriched.                     Whitley

moved for summary judgment on 8 May 2013.                  Travelers moved for

summary judgment on 9 May 2013.               On 19 August 2013, the trial

court entered an order granting summary judgment in favor of

Travelers.      On   29   August    2013,     the    court   entered   an    order

granting summary judgment to Whitley.                 Plaintiffs appeal from

both orders.

                                   Discussion

      On appeal, Plaintiffs argue that the trial court erred in

granting   summary    judgment     in   favor    of    (1)   Travelers   because

there were issues of material fact regarding whether Travelers

breached the insurance contract, and (2) Whitley because there

were issues of material fact regarding whether Whitley breached

a fiduciary duty.

      “Our standard of review of an appeal from summary judgment

is de novo; such judgment is appropriate only when the record

shows that there is no genuine issue as to any material fact and

that any party is entitled to a judgment as a matter of law.”

In re Will of Jones, 362 N.C. 569, 573, 669 S.E.2d 572, 576
                              -7-
(2008) (citation and internal quotation marks omitted; italics

added).

          The   moving   party  has  the   burden  of
          establishing the absence of any genuine
          issue of material fact and that it is
          entitled to judgment as a matter of law.
          Both before the trial court and on appeal,
          the evidence must be viewed in the light
          most favorable to the non-moving party and
          all inferences from that evidence must be
          drawn against the moving party and in favor
          of the non-moving party.

White v. Consol. Planning, Inc., 166 N.C. App. 283, 295-96, 603
S.E.2d 147, 157 (2004) (citations omitted), disc. review denied,

359 N.C. 286, 610 S.E.2d 717 (2005).

          A defendant may show entitlement to summary
          judgment by (1) proving that an essential
          element of the plaintiff’s case is non-
          existent, or (2) showing through discovery
          that the plaintiff cannot produce evidence
          to support an essential element of his or
          her claim, or (3) showing that the plaintiff
          cannot surmount an affirmative defense.
          Summary judgment is not appropriate where
          matters of credibility and determining the
          weight     of    the     evidence     exist.

          Once the party seeking summary judgment
          makes the required showing, the burden
          shifts to the nonmoving party to produce a
          forecast of evidence demonstrating specific
          facts, as opposed to allegations, showing
          that he can at least establish a prima facie
          case at trial.    To hold otherwise would be
          to allow [the] plaintiffs to rest on their
          pleadings,   effectively   neutralizing  the
          useful and efficient procedural tool of
          summary judgment.
                                            -8-

Stott v. Nationwide Mut. Ins. Co., 183 N.C. App. 46, 49, 643
S.E.2d 653,    656     (citation,       internal      quotation       marks,     and

ellipsis omitted), disc. review denied, __ N.C. __, 653 S.E.2d
876 (2007).

      I.     Summary Judgment as to Travelers

      Plaintiffs first argue that summary judgment in favor of

Travelers was error because the forecast of evidence establishes

a genuine issue of material fact, to wit,                          whether Travelers

properly cancelled Plaintiffs’ insurance policy                          and therefore

avoided     any    breach      of    contract     by   denying     coverage    for    the

restaurant fire.          We agree.

      The    notice       of    cancellation       issued    19     March     2012    and

purportedly        sent   to    Plaintiffs        stated    that    the     reason    for

cancellation of the policy was nonpayment of the premium.                            Under

the relevant policy conditions, cancellation for nonpayment of

the   premium      requires         ten   days’   notice    to     the   policyholder.

Cancellation for any other reason requires thirty days’ notice

to the policyholder.            Plaintiffs contend that the March premium

payment Booth and Watts claim was mailed on 16 March 2012 was

received by Travelers prior to the cancellation of the policy.

Travelers contends it was not.                    This forecast of conflicting

evidence presents a question of material fact because, if the
                                               -9-
March    premium          was    received,      Travelers’         cancellation         of   the

policy and denial of coverage were breaches of the insurance

contract.       If the premium was not received, Travelers did not

breach    the        contract      by     cancelling        the    policy       and     denying

coverage.

       Payment of an insurance premium is a condition precedent to

coverage.       Engelberg v. Home Ins. Co., 251 N.C. 166, 168, 110
S.E.2d 818,        820       (1959)    (citation        omitted).            It     is    well

established         that    a     payment      made   by    check     is    a    conditional

payment until paid by the bank on which it is drawn.                                 See Paris

v. Carolina Builders Corp., 244 N.C. 35, 38, 92 S.E.2d 405, 408

(1956).       “[W]hen a draft or check is accepted in payment of an

obligation          and    is    paid     on   presentation,         payment         ordinarily

relates back to the time the draft or check was delivered to the

payee or his duly authorized agent.”                        Id. (citations omitted).

“Evidence of the deposit in the mail[] of a letter, properly

stamped       and    addressed,         establishes        prima    facie       that    it    was

received in the regular course of the mail by the addressee.”

Wilson v. Claude J. Welch Builders Corp., 115 N.C. App. 384,

386,    444 S.E.2d 628,    629     (1994)    (citations       omitted;         italics

added).       “Evidence of nonreceipt of the letter by the addressee

or by his agent is some evidence that the letter was not mailed
                                      -10-
and raises a question of fact for the trier of fact.”                         Id.

(citations omitted; emphasis added).

    Travelers correctly notes that the issues of payment and

mailing of the check for payment are not synonymous and cites

cases   in    which    conditional    payments   by    check   have   not   been

recognized.      Those cases are easily distinguishable in that they

involve checks that were received by the payee but not honored

when presented to the drawee bank.           See Hayworth v. Philadelphia

Life Ins. Co., 190 N.C. 757, 759-60, 130 S.E. 612, 613-14 (1925)

(“A worthless check is not a payment. . . .              The failure to have

the funds in the bank to meet the check was the fault of the

drawer, and no loss resulted from any delay on the part of the

payee.”); see also Commercial Cas. Ins. Co. v. Durham Cnty, 190
N.C. 58, 62, 128 S.E. 469, 471 (1925) (“The checks which were

not paid do not constitute payments.”) (citation omitted).

    We       further   agree   with   Travelers       that   the   evidence   is

undisputed that the check purportedly written by Booth on 16

March 2012 was never presented to or paid by the drawee bank.

However, unlike in Hayworth and Commercial Cas. Ins. Co., there

has been no failure of the condition that the check “be . . .

paid on presentation[.]”         See Paris, 244 N.C. at 38, 92 S.E.2d

at 408.      Rather, the check has not been presented to the drawee
                                            -11-
bank at all.       The genuine issue of material fact in this matter

concerns the reason the check was not presented to the drawee

bank:      because       no    check    was        ever   written     and    mailed    by

Plaintiffs, because Travelers received the check but failed to

present it, or because Plaintiffs sent the check and it was lost

in the mail.        Resolution of this issue by the finder of fact

will, in turn, determine whether the cancellation notice was

properly issued by Travelers.

    Each side has presented evidence that tends to support an

answer to this question of fact in their own favor.                          Plaintiffs

have presented evidence in the form of a check stub from the

check     purportedly         written       and    mailed     16     March   2012     and

affidavits       from    two    witnesses         averring    that    the    check    was

written    and    then    mailed       to    Travelers       on    that   date.       This

evidence establishes prima facie that the check was received by

Travelers.       See Wilson, 115 N.C. App. at 386, 444 S.E.2d at 629.

Travelers has presented evidence of nonreceipt of the 16 March

check in the form of an affidavit from its regional controller

stating that it conducted an “internal search for any checks

written by Country Cafaye or Booth or any affiliated entities,”

but has been unable to find the 16 March 2012 check.                          As noted

supra, this “[e]vidence of nonreceipt . . . is some evidence
                                       -12-
that the letter was not mailed and raises a question of fact for

the trier of fact.”       Id. (citations omitted; emphasis added).           We

must reject Travelers’ suggestion that the fact that the 16

March 2012 check was never paid by the drawee bank means there

is     no   evidence    that    Plaintiffs    paid   their     March   premium.

Travelers is in effect asking this Court to “take its word for

it” that no check was received, just as Plaintiffs urge that we

believe their affidavits that the check was written and properly

mailed.      It is the role of a fact-finder at trial, and not of

this     Court,    to   weigh    the   credibility   of      such   conflicting

evidence.2        Thus, “[s]ummary judgment is not appropriate where

matters     of    credibility    and   determining    the     weight   of   the

evidence exist.”        Stott, 183 N.C. App. at 49, 643 S.E.2d at 656.

       Determining the facts on this point is the critical first

step to the proper resolution of this case.                    Should a fact-

finder conclude that Plaintiffs’ evidence is more credible than

Travelers’ evidence on this point, a further factual issue would

2
  We note that the finder of fact could decide that both
Plaintiffs and Travelers are telling the truth, and that the
check was mailed, but lost by the postal service.      In those
circumstances, Travelers would have been entitled to cancel
Plaintiffs’ policy upon giving Plaintiffs ten days’ notice. In
that case, the parties have forecast evidence of another
disputed issue of material fact:    Travelers claims it mailed
Plaintiffs the cancellation notice, which Plaintiffs claim they
never received.
                                               -13-
arise:      whether Travelers would have received the check mailed

16 March 2012 before Travelers sent the notice of cancellation

of   Plaintiffs’        policy       on   19     March       2012.      If   the   check       was

received by Travelers on or before 19 March 2012, the notice,

which states that the reason for cancellation is the nonpayment

of the March premium, was incorrectly issued and without effect.

Cancellation for any other reason would have required thirty

days’    notice        under        Plaintiffs’            policy.       Thus,     Travelers’

arguments     to       this    Court      as     to    whether       Plaintiffs     made      the

minimum payment stated in the cancellation notice by the 8 April

2012 deadline are premature.                   This matter will be relevant only

if the finder of fact determines that the cancellation notice

was properly issued, either because the 16 March 2012 check was

never sent to Travelers or that it was sent but not received

prior to issuance of the cancellation notice.                                Those questions

of   material      fact       remain      unresolved.           Accordingly,       the       trial

court erred in granting summary judgment in favor of Travelers.

      II.    Summary Judgment as to Whitley

      Plaintiffs         argue        that       they       have     forecast      sufficient

evidence     to    create       a    genuine      issue       of     material    fact    as     to

whether Whitley had a course of dealing with Plaintiffs that

established        a    fiduciary         duty        to    notify     Plaintiffs       of    the
                                     -14-
cancellation of the insurance policy.              Consequently, Plaintiffs

contend that summary judgment in favor of Whitley was error.                  We

disagree.

       “An insurance agent has a limited fiduciary duty to the

insured, to wit, the agent must correctly name the insured in

the policy and correctly advise the insured of the nature and

extent of his coverage under the policy.”            Cobb v. Pa. Life Ins.

Co.,   215   N.C.   App.    268,   275,     715 S.E.2d 541,   548    (2011)

(citation omitted).

             An implied duty to advise may only be shown
             if:   (1) the agent received consideration
             beyond mere payment of the premium; (2) the
             insured made a clear request for advice; or
             (3) there is a course of dealings over an
             extended period of time which would put an
             objectively reasonable insurance agent on
             notice that his advice was being sought and
             relied on.

Id. (citation, internal quotation marks, and brackets omitted).

Evidence      of    a    long-standing       business      relationship       is

insufficient by itself to show a course of dealing which would

put a reasonable insurance agent on notice that his advice is

being sought and relied upon.         See Bigger v. Vista Sales & Mktg,

Inc., 131 N.C. App. 101, 105, 505 S.E.2d 891, 893-94 (1998).

       Plaintiffs   do     not   allege   either    that   Whitley      received

compensation beyond the premium or that Plaintiffs made a clear
                                           -15-
request for advice.           The only basis on which Plaintiffs argue

that Whitley had a fiduciary duty is that there was an extended

course of dealing over fifteen years with Booth and his family.

Despite    this     allegation,      however,       the    record    is     clear   that

Plaintiffs       themselves    had    no    insurance      contract       with    Whitley

prior to the 2011 policy purchased for Country Cafaye.                           Further,

Plaintiffs        do   not      present           any     evidence     of        specific

communications which would put a “reasonable insurance agent on

notice that his advice was being sought and relied on.”                             Cobb,
215 N.C. App. at 275, 715 S.E.2d at 548 (citation, internal

quotation marks, and brackets omitted).                     Instead, Booth merely

states in his affidavit that “if an issue ever arose Whitley

would call and discuss the matter with me.”                     This statement did

not differentiate between the policy at issue and the previous

policies owned by other Booth family members.                    The only specific

communication, beyond procuring the policy, that Booth contends

that he had with Whitley regarding the Country Cafaye policy had

to   do   with    obtaining    a     copy   of     the    renewal    policy.        Booth

plainly    states      in     his    deposition          that   he   had     no     other

communication with Whitley regarding the Country Cafaye policy.

Even considered in the light most favorable to Plaintiffs, this

communication is not a solicitation of advice from Whitley and
                                         -16-
is certainly not sufficient to put a reasonable insurance agent

on notice that his advice is being sought and relied upon.

    Plaintiffs         further   offered        the   affidavits     of   Elizabeth

Newsom, Booth’s niece, and Peggy T. Booth, Booth’s mother, to

support   the    extent    of    the   relationship      with   Whitley.         Both

affidavits      aver   that    the   Booth   family     had   been   a    long   time

customer of Whitley, and that Roy Whitley would call Booth to

discuss “any issues” with the various insurance policies the

family    has    held.        However,    neither     affidavit      presents     nor

forecasts any evidence of specific conduct creating a course of

dealing between Whitley and Plaintiffs.                 Booth expressly states

that he relied on Whitley based on their “lengthy relationship,”

referring to his family’s relationship with Whitley.                        Even if

Booth could use Whitley’s conduct regarding insurance policies

owned by his parents to create a course of dealing with regard

to his own insurance policy for Country Cafaye, the evidence

presented is insufficient.               Plaintiffs present evidence of a

long-standing business relationship only, which is not enough to

put a reasonable insurance agent on notice that his advice is

being sought and relied upon.                Therefore, Plaintiffs did not

present evidence sufficient to show the existence of a fiduciary
                               -17-
duty on the part of Whitley.    Accordingly, we affirm the trial

court’s grant of summary judgment in favor of Whitley.

    REVERSED IN PART; AFFIRMED IN PART.

    Judges CALABRIA and ELMORE concur.

    Report per Rule 30(e).