Nationwide Prop. & Cas. Ins. Co. v. Smith , 256 N.C. App. 492 ( 2017 )

IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA17-283
Filed: 21 November 2017
Duplin County, No. 14 CvS 380
NATIONWIDE PROPERTY AND CASUALTY INSURANCE COMPANY;
NATIONWIDE MUTUAL INSURANCE COMPANY; AND NATIONWIDE
INSURANCE COMPANY OF AMERICA, Third-Party Plaintiffs,
v.
TIMOTHY W. SMITH and TIMOTHY R. SMITH, Third-Party Defendants.
Appeal by Third-Party Plaintiffs from order entered 2 December 2016 by Judge
Phyllis M. Gorham in Duplin County Superior Court. Heard in the Court of Appeals
7 September 2017.
Marshall, Williams & Gorham, L.L.P, by William Robert Cherry, Jr., for the
Third-Party Plaintiffs-Appellants.
Donald E. Clark, Jr., Attorney at Law, PPLC, by Donald E. Clark, Jr., for the
Third-Party Defendants-Appellees.
DILLON, Judge.
The Third-Party Plaintiffs (collectively “Nationwide”) appeal from an order of
the trial court dismissing their Third-Party Complaint pursuant to Rule 12(b)(6) of
the North Carolina Rules of Civil Procedure.
I. Background
Plaintiffs George Olsen, Sr., and his wife, Sharon N. Olsen, purchased a
personal automobile underinsurance motorist insurance policy from Nationwide.
NATIONWIDE V. SMITH
Opinion of the Court
This policy provided coverage to the Olsens should they be injured by an at-fault
driver whose liability coverage limits were too low to cover their damages.
In late 2013, Mr. Olsen was walking by the side of the road when he was struck
by a car driven by Skylar Wellington (“Defendant”). Defendant had lost control of her
vehicle and drifted off of the paved portion of the street. About three hours after the
accident, Defendant’s blood alcohol concentration was tested and registered a blood
alcohol level of .15.
In 2014, Plaintiffs filed this action against Defendant and Nationwide.
Nationwide filed a third-party complaint against Timothy W. Smith and Timothy R.
Smith, alleging that the Smiths had negligently served Defendant alcohol and
allowed her to drive.1 Nationwide sought contribution from the Smiths for a portion
of their alleged common liability for Plaintiffs’ injuries.
Defendant’s auto liability carrier offered the full limit of their liability coverage
to Plaintiffs in exchange for Plaintiffs’ execution of a covenant not to enforce
judgment. Defendant’s liability carrier was thus released from further liability and
was not obligated to participate in the lawsuit.
Plaintiffs then negotiated a settlement with Nationwide for $850,000.
Following the settlement, Plaintiffs signed a release of all claims and filed a voluntary
dismissal of their complaint with prejudice. Accordingly, the only remaining issue in
1 Nationwide’s answer and third-party complaint referenced in this opinion is its second
response to Plaintiffs’ suit, filed in response to Plaintiffs’ second amended complaint.
-2-
NATIONWIDE V. SMITH
Opinion of the Court
the case was Nationwide’s third-party complaint against the Smiths, who had
allegedly served Defendant alcohol shortly before the accident.
The Smiths’ moved to dismiss Nationwide’s third-party complaint for
contribution. The trial court granted the Smiths’ motion based on Rule 12(b)(6) for
failure to state a claim upon which relief could be granted. Nationwide timely
appealed.
II. Analysis
On appeal, Nationwide argues that the trial court improperly granted the
Smiths’ motion to dismiss Nationwide’s claim for contribution, contending that it had
a cause of action to seek contribution from the Smiths for their role in causing its
insured’s injuries.
“A motion to dismiss under Rule 12(b)(6) of the North Carolina Rules of Civil
Procedure presents the question [of] whether, as a matter of law, the allegations of
the complaint, treated as true, are sufficient to state a claim upon which relief can be
granted under some legal theory.” Lynn v. Overlook Dev., 328 N.C. 689, 692, 403
S.E.2d 469, 471 (1991). We review a trial court’s Rule 12(b)(6) dismissal de novo.
Wray v. City of Greensboro, ___ N.C. ___, ___, 802 S.E.2d 894, 898 (2017).
In its brief, Nationwide asserts that it has the right to recover from the Smiths
because Defendant and the Smiths have a common liability for the injury to the
Plaintiffs. However, the Smiths contend that Nationwide has no right to assert a
-3-
NATIONWIDE V. SMITH
Opinion of the Court
claim based on contribution because a claim for contribution is only available among
joint tort-feasors and Nationwide, as Plaintiffs’ insurer, is not a tort-feasor. Based
on our jurisprudence, we must agree, and therefore affirm the ruling of the trial court.
Section 20-279.21 of our General Statutes regulates motor vehicle liability
policies in North Carolina and allows an underinsured motorist insurer to fully
participate in an action by its insured against an underinsured motorist:
[T]he underinsured motorist insurer shall have the right to
appear in defense of the claim without being named as a
party therein, and . . . may participate in the suit as fully
as if it were a party. The underinsured motorist insurer
may elect, but may not be compelled, to appear in the
action in its own name and present therein a claim against
other parties.
N.C. Gen. Stat. § 20-279.21(b)(4) (2015) (emphasis added). However, we have held
that the right of a plaintiff’s underinsurance motorist insurer to bring claims does not
extend to a right to seek contribution against other tort-feasors who may have
contributed to causing the accident. Johnson v. Hudson, 122 N.C. App. 188, 468
S.E.2d 64 (1996).
In Johnson, we acknowledged that N.C. Gen. Stat. § 20-279.21(b)(4) clearly
allows Nationwide to assert a claim against other parties when it appears in its own
name. Id. at 190, 468 S.E.2d at 66. However, we also noted that our General Statutes
provide that “[t]he right of contribution exists only in favor of a tort-feasor who has
paid more than his pro rata share of the common liability[.]” N.C. Gen. Stat. § 1B-
-4-
NATIONWIDE V. SMITH
Opinion of the Court
1(b) (2015) (emphasis added). In Johnson, our Court concluded that “[t]he specific
language of N.C.G.S. § 1B-1(b) controls over the more general provision of N.C.G.S.
§ 20-279.21(b)(4)[,]” ultimately holding that the underinsured insurance carrier was
not a tort-feasor. Therefore, N.C. Gen. Stat. § 1B-1(b) prohibited the carrier’s claim
of contribution, specifically. See Johnson, 122 N.C. App. at 190, 468 S.E.2d at 66
(“[N.C. Gen. Stat. § 20-279.21] allows the underinsured insurance carrier to assert all
claims that could have been asserted by its insured, the [plaintiff].” (Emphasis
added.)); see also McCrary v. Byrd, 148 N.C. App. 630, 638, 559 S.E.2d 821, 827 (2002)
(“An underinsurance motorist carrier is not a tort-feasor and thus has no right of
contribution.”).
Here, Nationwide, as the underinsured insurance carrier, has no right to assert
a claim against the Smiths for contribution because its insured – the Plaintiffs – never
had any right to assert such a claim. Even in Nationwide’s brief to this Court, it
acknowledges that “[t]he rights of contribution arise when a tortfeasor has paid
damages which exceed his pro rata share.” (Emphasis added.) Therefore, as in
Johnson, we hold that, as a matter of law, Nationwide has no right to seek
contribution from the Smiths because neither Nationwide nor its insured is a tort-
feasor. Accordingly, the trial court did not err in granting the Smiths’ motion to
dismiss Nationwide’s third-party complaint seeking contribution. This holding
should not be construed as a restriction on Nationwide’s ability to assert any properly
-5-
NATIONWIDE V. SMITH
Opinion of the Court
preserved direct claim which could have been asserted by its insured, the Plaintiffs.
See Johnson, 122 N.C. App. at 190, 468 S.E.2d at 66 (“[W]hile N.C. [Gen. Stat.] § 1B-
1(b) prohibits a claim of contribution by [the insurer], N.C. [Gen. Stat.] § 20-
279.21(b)(4) allows [the insurer] to assert a direct claim that could have been asserted
by its insured[.]”).
AFFIRMED.
Judges HUNTER JR., and ARROWOOD concur.
-6-