Ha v. Nationwide Gen. Ins. Co. , 266 N.C. App. 10 ( 2019 )

IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA19-75
Filed: 18 June 2019
Wake County, No. 17 CVS 955
NHUNG HA and NHIEM TRAN, Plaintiffs,
v.
NATIONWIDE GENERAL INSURANCE COMPANY, Defendant.
Appeal by plaintiffs from judgment entered 31 August 2018 by Judge Rebecca
W. Holt in Wake County Superior Court. Heard in the Court of Appeals 7 May 2019.
John M. Kirby for plaintiff-appellants.
Bailey & Dixon, LLP, by David S. Wisz, for defendant-appellee.
ARROWOOD, Judge.
Nhung Ha (“Ms. Ha”) and Nhiem Tran (“Mr. Tran”) (collectively, “plaintiffs”)
appeal from a judgment dismissing their complaint in part, and declaring Nationwide
General Insurance Company (“defendant” or “Nationwide”) properly cancelled the
homeowner’s insurance policy it issued to plaintiffs. For the reasons stated herein,
we reverse and remand.
I. Background
Mr. Tran contacted Nationwide on or about 1 April 2015 to secure a
homeowner’s insurance policy for plaintiffs’ home. Nationwide issued the policy that
same day.
HA V. NATIONWIDE GENERAL INS. CO.
Opinion of the Court
On or about 14 April 2015, Nationwide’s underwriting department sent an
inspector to plaintiffs’ home. The inspector issued a report on 25 April 2015,
identifying several hazards he discovered at the home: (1) rotten siding, (2) an
unsecured trampoline, and (3) an unfenced inground pool. Based on this report,
Nationwide decided to cancel plaintiffs’ policy. The underwriter who made this
decision contacted Ms. Brenda Elkerson, a Nationwide employee whose job
responsibilities include drafting written notices of policy cancellations, and asked her
to prepare a notice cancelling plaintiffs’ policy. Ms. Elkerson drafted the letter and
sent a memo to the agent on plaintiffs’ policy regarding the cancellation. The letter
of cancellation listed the hazards identified by the inspector as the reason for the
policy’s cancellation, and explained the specific steps plaintiffs could take to
ameliorate the hazards to reinstate coverage. The letter, dated 22 May 2015, gave
plaintiffs until 6 June 2015 to address the hazards. If they did not, Nationwide would
cancel the policy at 12:01 a.m. on 6 June 2015.
Ms. Elkerson instructed Nationwide’s processing department to print the
cancellation letter for mailing. The certificate of mail report maintained by
Nationwide shows that the cancellation letter was presented for mailing on
22 May 2015. Although the letter was not returned to Nationwide, plaintiffs never
received it.
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Opinion of the Court
On 24 July 2015, a fire destroyed plaintiffs’ home. When plaintiffs contacted
Nationwide to file a claim, they were informed they were not insured, as the policy
had been cancelled. Thereafter, plaintiffs retained legal counsel to pursue a claim for
reimbursement, which Nationwide denied by letter on 1 October 2015.
Plaintiffs initiated an action against defendant by filing a complaint in Wake
County Superior Court on 24 January 2017, seeking damages for breach of contract
and a declaratory judgment that Nationwide did not timely and properly cancel the
policy. Nationwide answered and asserted a counterclaim requesting a declaratory
judgment that it properly cancelled plaintiffs’ policy.
The matter came on for hearing before the Honorable Rebecca W. Holt in Wake
County Superior Court on 27 August 2018. On 31 August 2018, the trial court
entered a judgment dismissing plaintiffs’ breach of contract claim, and declaring:
“Nationwide has no duty or obligation under the Policy to make payment to the
Plaintiffs for the damage to the Residence and its contents which resulted from the
loss on the grounds that the Policy was timely and properly cancelled.” The trial
court taxed the costs of the action to plaintiffs.
Plaintiffs appeal.
II. Discussion
Plaintiffs argue the trial court erred by concluding Nationwide complied with:
(1) N.C. Gen. Stat. § 58-41-15(c) (2017), and (2) the insurance policy’s termination
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Opinion of the Court
requirements. Because we agree with plaintiffs that the trial court erred by
concluding Nationwide complied with N.C. Gen. Stat. § 58-41-15(c), we reverse and
do not reach the second issue on appeal.
“In reviewing a trial judge’s findings of fact, we are strictly limited to
determining whether the trial judge’s underlying findings of fact are supported by
competent evidence, in which event they are conclusively binding on appeal, and
whether those factual findings in turn support the . . . ultimate conclusions of law.”
State v. Navarro, __ N.C. App. __, __, 787 S.E.2d 57, 62 (2016) (citations and internal
quotation marks omitted). “Conclusions of law are reviewed de novo and are subject
to full review.” State v. Biber, 365 N.C. 162, 168, 712 S.E.2d 874, 878 (2011).
N.C. Gen. Stat. § 58-41-15 governs the cancellation of homeowners’ insurance
policies. Pursuant to this section, an insurer may only cancel an insurance policy, or
renewal thereof “prior to the expiration of the term or anniversary date stated in the
policy and without the prior written consent of the insured” if the insurer cancels for
one of the reasons listed in N.C. Gen. Stat. § 58-41-15(a), which are:
(1) Nonpayment of premium in accordance with the
policy terms;
(2) An act or omission by the insured or his
representative that constitutes material
misrepresentation or nondisclosure of a material fact
in obtaining the policy, continuing the policy, or
presenting a claim under the policy;
(3) Increased hazard or material change in the risk
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Opinion of the Court
assumed that could not have been reasonably
contemplated by the parties at the time of assumption
of the risk;
(4) Substantial breach of contractual duties, conditions,
or warranties that materially affects the insurability
of the risk;
(5) A fraudulent act against the company by the insured
or his representative that materially affects the
insurability of the risk;
(6) Willful failure by the insured or his representative to
institute reasonable loss control measures that
materially affect the insurability of the risk after
written notice by the insurer;
(7) Loss of facultative reinsurance, or loss of or
substantial changes in applicable reinsurance as
provided in G.S. 58-41-30;
(8) Conviction of the insured of a crime arising out of acts
that materially affect the insurability of the risk; or
(9) A determination by the Commissioner that the
continuation of the policy would place the insurer in
violation of the laws of this State;
(10) The named insured fails to meet the requirements
contained in the corporate charter, articles of
incorporation, or bylaws of the insurer, when the
insurer is a company organized for the sole purpose of
providing members of an organization with insurance
coverage in this State.
N.C. Gen. Stat. § 58-41-15(a)(1)-(10).
A cancellation permitted by N.C. Gen. Stat. § 58-41-15(a):
is not effective unless written notice of cancellation has
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Opinion of the Court
been delivered or mailed to the insured, not less than 15
days before the proposed effective date of cancellation. The
notice must be given or mailed to the insured, and any
designated mortgagee or loss payee at their addresses
shown in the policy or, if not indicated in the policy, at their
last known addresses. The notice must state the precise
reason for cancellation. Proof of mailing is sufficient proof
of notice. Failure to send this notice to any designated
mortgagee or loss payee invalidates the cancellation only
as to the mortgagee’s or loss payee’s interest.
N.C. Gen. Stat. § 58-41-15(b) (emphasis added). However, N.C. Gen. Stat. § 58-41-
15(b)
does not apply to any insurance policy that has been in
effect for less than 60 days and is not a renewal of a policy.
That policy may be cancelled for any reason by furnishing
to the insured at least 15 days prior written notice of and
reasons for cancellation.
N.C. Gen. Stat. § 58-41-15(c) (emphasis added). The failure to comply with the
statutory requirements for cancelling an insurance policy renders the cancellation
ineffective. Pearson v. Nationwide Mut. Ins. Co., 325 N.C. 246, 259, 382 S.E.2d 745,
751-52 (1989).
Here, the trial court found that plaintiffs “did not receive the cancellation
letter.” But the trial court concluded that Nationwide proved by a preponderance of
the evidence that it complied with N.C. Gen. Stat. § 58-41-15(c), explaining:
Although [sub]section (c) does not include the language,[ ]
[“]proof of mailing is sufficient proof of notice”, that
language is included in [sub]section (b). Reading the
statute as a whole and giving the term “furnishing” it’s [sic]
ordinary meaning – “to provide, supply of equip [sic], for
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Opinion of the Court
the accomplishment of a particular purpose” (Black’s Law
Dictionary 608 – 5[th] ed. 1979), this Court finds that the
proof of mailing by Nationwide is sufficient notice under
the statute. This Court declines to interpret the statute to
require Nationwide to prove actual knowledge on the part
of the insureds.
It is undisputed that the cancellation of plaintiffs’ policy is controlled by N.C.
Gen. Stat. § 58-41-15(c): the policy was in effect less than 60 days and was not the
renewal of a policy. However, plaintiffs contend the trial court erred by concluding
proof of mailing provided sufficient notice to the insured under this subsection.
Instead, plaintiffs argue, subsection (c)’s use of the statutory term “furnishing”
required actual delivery to and/or receipt of the notice by the insured. We agree.
N.C. Gen. Stat. § 58-41-15 does not define “furnishing[,]” and no case law in
North Carolina directly addresses what is required for an insurer to “furnish” notice
of cancellation. The only North Carolina case that addresses the definition of
“furnishing” is Queensboro Steel Corp. v. E. Coast Mach. & Iron Works, Inc., 82 N.C.
App. 182, 346 S.E.2d 248 (1986). However, Queensboro is not controlling here, as it
involved this Court’s interpretation of the term “furnish” in the context of a
materialman’s lien statute claim under Chapter 44A of the General Statutes, and the
relevant statute specifically required furnishing “at the site[.]” See id. at 184, 346
S.E.2d at 250 (analyzing N.C. Gen. Stat. § 44A-10 (2017)). Nonetheless, as in
Queensboro, the language before our Court in the instant case is ambiguous, and
therefore subject to judicial determination of legislative intent.
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Opinion of the Court
As this Court explained in Queensboro, “[g]enerally, words in a statute that
have not acquired a technical meaning must be given their natural, approved, and
recognized meaning. In determining whether statutory language is ambiguous, and
therefore subject to judicial determination of legislative intent, courts may consult a
dictionary.” Id. at 185, 346 S.E.2d at 250 (citations and internal quotation marks
omitted). Black’s Law Dictionary defines furnish, in a legal context, as “[t]o supply,
provide, or equip, for accomplishment of a particular purpose.” Id. at 185-86, 346
S.E.2d at 250 (quoting Black’s Law Dictionary 608 (5th ed. 1979)); see Webster’s
College Dictionary 588 (2014) (defining “furnish” as “to supply, provide, or equip with
whatever is necessary. . . .”).
Given the lack of a statutory definition and the dictionary definition of
“furnish,” it is not clear whether the legislature, by requiring the insurer “furnish”
notice, intended to require actual delivery to and/or receipt of the notice by the
insured. Another reasonable interpretation, as argued by defendant, is that proof of
mailing is sufficient to “furnish” notice under the statute. Therefore, we conclude the
statutory language is ambiguous and we must consider relevant canons of statutory
interpretation. See Purcell v. Friday Staffing, 235 N.C. App. 342, 347, 761 S.E.2d
694, 698 (2014) (“When . . . a statute is ambiguous, judicial construction must be used
to ascertain the legislative will.” (citation and internal quotation marks omitted)).
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Opinion of the Court
“Perhaps no interpretive fault is more common than the failure to follow the
whole-text canon, which calls on the judicial interpreter to consider the entire text,
in view of its structure and of the physical and logical relation of its many parts.”
N.C. Dep’t of Transp. v. Mission Battleground Park, DST, 370 N.C. 477, 483, 810
S.E.2d 217, 222 (2018) (citation and internal quotation marks omitted). Accordingly,
we read N.C. Gen. Stat. § 58-41-15 holistically to determine whether the trial court
erred by concluding proof of mailing provided sufficient notice to the insured under
subsection (c) of this statute.
Subsection (c) clearly varies from subsection (b), and, because we “presume[ ]
that the Legislature acted with full knowledge of prior and existing law[,]” see Ridge
Cmty. Inv’rs, Inc. v. Berry, 293 N.C. 688, 695, 239 S.E.2d 566, 570 (1977), we must
presume that this variation is meaningful. As such, “proof of mailing” must be
different from “furnishing” notice. After all, if the General Assembly intended for
proof of mailing to be sufficient under subsection (c), they could have included the
express language found in subsection (b) in subsection (c). Instead, the General
Assembly provided two different standards for notice.
Defendant does not dispute there is variation between the standards for notice
in subsection (b) and (c). However, defendant argues that, reading the statute
holistically, subsection (c) does not require as much notice as subsection (b).
Therefore, defendant contends, the use of “furnish” in subsection (c) must suggest
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Opinion of the Court
something less than proof of mailing, which the plain language of the statute states
is sufficient to provide notice under subsection (b). In support of this argument,
defendant argues the General Assembly would require less notice for cancellations of
policies pursuant to subsection (c) because policies cancelled under subsection (c) are
either not renewals, or have not been in effect longer than 60 days, or both. In
contrast, policies cancelled pursuant to subsection (b) are either renewals, or have
been in effect for longer than 60 days. We disagree.
Subsection (b) provides for notice of cancellation to insureds who have
committed an offense listed in subsection (a); thus, these insureds are likely aware
both that they are noncompliant with the policy, and also that the policy could be
terminated based on this act. In contrast, subsection (c) provides for notice of
cancellation of policies for any reason. As such, it stands to reason that termination
under this subsection requires more notice, as an insured could be caught completely
unaware by a termination of a policy pursuant to subsection (c). Therefore, we hold
proof of mailing is not sufficient to “furnish” notice of cancellation to insureds under
N.C. Gen. Stat. § 58-41-15(c).
Furthermore, the statute at issue is remedial, and intended to protect insureds
from in-term policy cancellations without notice; therefore, we construe the statute
in favor of finding coverage. See Metro. Prop. & Cas. Ins. Co. v. Caviness, 124 N.C.
App. 760, 764, 478 S.E.2d 665, 668 (1996). Toward that end, the purpose of the
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Opinion of the Court
statute is best served when every provision of the Act is interpreted to provide an
insured with the fullest possible protection. It follows that the required notice of
cancellation to insureds who are innocent of wrongdoing would not be less than notice
to those insureds whose policies are cancelled under subsection (b), based on a bad
act listed in subsection (a), such as “[s]ubstantial breach of contractual duties,
conditions, or warranties that materially affects the insurability of the risk;” or “[a]
fraudulent act against the company by the insured or his representative that
materially affects the insurability of the risk[.]” N.C. Gen. Stat. § 58-41-15(a)(4)-(5).
Accordingly, subsection (c), which provides for the cancellation of policies for any
reason, must be afforded the fullest possible protection.
Therefore, subsection (c)’s requirement that the insurer “furnish” notice of
cancellation must mean something more than “proof of mailing.” Considering this
conclusion in light of the dictionary definition of furnishing, “[t]o supply, provide, or
equip, for accomplishment of a particular purpose[,]” we hold the statute requires
actual delivery to and/or receipt of the notice by the insured.
Because the facts before us demonstrate nothing more than that Nationwide
provided “proof of mailing[,]” and the trial court expressly found plaintiffs did not
receive notice, Nationwide failed to afford plaintiffs sufficient notice of the policy’s
cancellation. As a result, the cancellation was ineffective, Pearson, 325 N.C. at 259,
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Opinion of the Court
382 S.E.2d at 751-52, and the trial court erred by concluding Nationwide complied
with the provisions of N.C. Gen. Stat. § 58-41-15(c).
III. Conclusion
For the foregoing reasons, we reverse and remand for the trial court to consider
the matter consistent with this opinion.
REVERSED AND REMANDED.
Judge INMAN concurs.
Judge TYSON dissents by separate opinion.
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No. COA19-75 – Ha v. Nationwide General Ins. Co.
Sympathetic facts result in bad precedents. All evidence presented at trial
shows Nationwide General Insurance Company (“Nationwide” or “defendant”) timely
and correctly furnished notice of cancellation to plaintiffs, Ha and Tran. Nationwide’s
actions and notice fully complied with N.C. Gen. Stat. § 58-41-15 and with the
requirements of the policy agreed to by plaintiffs.
The trial court properly determined Nationwide had furnished notice to
plaintiffs concerning the impending termination of plaintiffs’ policy. The trial court’s
conclusions of law are supported by its findings and the evidence at trial and its order
is properly affirmed. I respectfully dissent from the majority’s opinion.
I. Factual Background
The majority’s opinion fails to include relevant evidence and events the trial
court found and upon which it entered judgment for defendant. An excess premium
check for $89.50 was refunded by Nationwide and returned to plaintiffs on 8 June
2015. Pursuant to its policy, Nationwide “returned a pro rata portion of the premium”
which also contained the policy number affiliated with plaintiffs’ home insurance
policy. Nationwide’s policy includes printing the policy number on each check to
distinguish it from other insurance policies.
Plaintiffs initially denied receipt of this premium refund, but later conceded
they had, in fact, received and cashed the check. Nationwide submitted a copy of the
cancelled premium refund check with the policy number thereon, and authenticated
plaintiffs’ signature thereon. After having mailed the premium refund check,
HA V. NATIONWIDE GENERAL INS. CO.
TYSON, J., dissenting
Nationwide also discontinued withdrawing policy payments from plaintiffs’ checking
account. None of these undisputed facts are set out in the majority’s opinion.
The majority’s opinion also provides only a cursory overview of Nationwide’s
process to mail notices. The testimony describes Nationwide’s extensive mailing
protocol. This process includes “an employee from the processing department hand-
delivering” the notices of cancellation to “a mailroom employee along with a
Certificate of Mail Report.” Accompanying the Certificate of Mail Report, was a
“manifest listing each cancellation letter with an individual article number and the
addressee.”
Next, the mailroom employee matches the manifest and the letters, folds the
letters by hand, and places the letters into the properly addressed and stamped
envelopes. Before delivering the letters to the post office, the mailroom employee
counts the number of envelopes to account for all pieces of mail. The 22 May 2015
Certificate of Mail Report, which specifically includes the letter mailed to plaintiffs,
shows 510 cancellation letters were presented to the United States Postal Service.
This document included Ha’s name, address, and policy number. The detailed
protocol insures each piece of mail is sent to the proper address. The premium check
sent to plaintiffs and was cashed more than six weeks prior to plaintiffs’ loss.
II. Cancellation of Policy
A. Statutory Requirements
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TYSON, J., dissenting
The trial court correctly determined the undisputed timeline of this case. On
1 April 2015, Nationwide effectuated a provisional homeowner’s insurance policy for
plaintiffs. Plaintiffs agreed to pay premiums by automatic draft from their checking
account. A Nationwide representative left a voicemail on 10 April 2015 at the number
plaintiffs had provided, advising plaintiffs of a routine inspection of their home.
Nationwide inspected plaintiffs’ premises on 14 April 2015 and identified
several hazards. On 22 May 2015, Nationwide “furnished” and mailed written notice
of policy cancellation. The notice of cancellation indicated the policy would terminate
on 6 June 2015 at 12:01 a.m.
Our general statutes provide that no insurance provider may cancel a policy
without the insured’s consent outside an enumerated list of ten specified exceptions.
N.C. Gen. Stat. § 58-41-15(a) (2017) (“No insurance policy or renewal thereof may be
cancelled by the insurer prior to the expiration of the term or anniversary date stated
in the policy and without the prior written consent of the insured, except for any one
of the following [ten] reasons” (emphasis supplied)). This non-cancellation provision
prior to the expiration of the term specifically
does not apply to any insurance policy that has been in
effect for less than 60 days and is not a renewal of a policy.
That policy may be cancelled for any reason by furnishing
to the insured at least 15 days prior written notice of and
reasons for cancellation.
N.C. Gen. Stat. § 58-41-15(c) (2017) (emphasis supplied).
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TYSON, J., dissenting
This statute plainly indicates section (c) applies to insureds, like plaintiffs,
whose policies have been provisionally initiated or insured within the previous sixty-
day period. Based upon the stipulated timeline, the policy had been in effect for 51
days when Nationwide furnished notice to plaintiffs to cancel the policy. It is
undisputed and the majority’s opinion acknowledges defendant’s cancellation of
plaintiffs’ policy clearly falls within N.C. Gen. Stat. § 58-41-15(c), because the policy
had been in effect “for less than 60 days.” Id. Here, Nationwide properly cancelled
the policy within the first sixty days of issuance. Nationwide is not limited by the
enumerated reasons for cancellation, but rather maintained the absolute right to
cancel the policy “for any reason.” Id.
The stipulated timeline also indicates the notice of cancellation fully complied
with the statutory requirement of fifteen days’ prior written notice to the insured
before cancellation became effective. The trial court properly found and the majority’s
opinion concedes that Nationwide fully complied with the plain terms of the
controlling statute.
B. “Furnishing” Notice
The majority’s opinion erroneously concludes the word “furnish” must be
interpreted to mean Nationwide must prove actual delivery to and receipt of a
cancellation letter by plaintiffs. No binding precedents interpret how “furnish” is to
be defined in the context of N.C. Gen. Stat. § 58-41-15. The majority’s opinion notes
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the only North Carolina case that addresses the definition of “furnish” is Queensboro
Steel Corp. v. E. Coast Mach. & Iron Works, Inc., 82 N.C. App. 182, 346 S.E.2d 248
(1986). The majority’s opinion acknowledges Queensboro Steel does not control here
because it pertains to the Court’s interpretation of the term “furnish” within Chapter
44A of the General Statutes which focuses on materialman’s and mechanic’s liens.
In reviewing questions of statutory intent and meaning, “[t]he primary
objective of statutory interpretation is to give effect to the intent of the legislature.”
Purcell v. Friday Staffing, 235 N.C. App. 342, 346, 761 S.E.2d 694, 698 (2014). If
statutory language is ambiguous, this Court should analyze the entire statute in
order to determine legislative intent. See id. at 347, 761 S.E.2d at 698 (“When . . . a
statute is ambiguous, judicial construction must be used to ascertain the legislative
will.”).
The majority’s opinion asserts the statutes must be viewed holistically to
determine the intent of the legislature. See N.C. Dep’t of Transp. v. Mission
Battleground Park, DST, 370 N.C. 477, 483, 810 S.E.2d 217, 222 (2018) (“Perhaps no
interpretive fault is more common than the failure to follow the whole-text canon,
which calls on the judicial interpreter to consider the entire text, in view of its
structure and of the physical and logical relation of its many parts.”).
This Court can deduce the intent of the legislature by considering the entire
text of the statute and comparing the language of two distinct sections. N.C. Gen.
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TYSON, J., dissenting
Stat. § 58-41-15(a) requires actual notice by way of the insured’s consent where an
insurance company terminates a non-provisional policy prior to its stated expiration.
Section (c) of the statute only requires the insurer to furnish notice of
cancellation to an insured under a policy “that has been in effect for less than 60
days.” The legislature could have written the statute to require the insurer to prove
actual notice and receipt. See N.C. Gen. Stat. § 58-36-105 (2017) (governing the
cancellation of worker’s compensation insurance policies and requiring that a written
notice of cancellation must be sent by registered or certified mail, return receipt
requested, with the policy remaining in effect “until such method is employed and
completed”); see also N.C. Gen. Stat. § 58-36-85 (2017) (requiring the cancellation of
personal motor vehicle insurance policies be sent by first-class mail and providing the
insured ten days from receipt of the notice to request review by the Department of
Insurance).
Instead, section (c), which applies to provisional and newly issued policies “that
has been in effect for less than 60 days,” such as plaintiffs’ policy, plainly and
unambiguously requires notice of cancellation to be furnished. As the majority’s
opinion concedes, the language distinguishing sections (a) and (c) in the statute
indicates the General Assembly’s intention to provide “two different standards for
notice” to policy holders.
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TYSON, J., dissenting
“In a legal context, ‘furnish’ means ‘[t]o supply, provide, or equip, for the
accomplishment of a particular purpose.”’ Queensboro Steel, 82 N.C. App. at 185-86,
346 S.E.2d at 250 (quoting Black’s Law Dictionary 608 (5th ed. 1979)). English
language dictionary definitions are similar. See Webster’s New World College
Dictionary 588 (5th ed. 2014) (“to supply; provide; give).” Applying the plain meaning
of “furnish” or “furnishing,” and reading the statute as a whole, led the trial court to
correctly conclude the insurer’s undisputed proof of mailing satisfies proof of notice.
The General Assembly clearly enacted two different standards of notice.
Section (a) requires signed consent and acknowledgment of a cancellation from an
insured. Section (c) requires that an insurance company “furnish” or provide notice.
In this case, Nationwide acted in accordance with the statute by providing or
furnishing notice via the United States Postal System to the address plaintiffs had
provided. Requiring the insurer to additionally prove actual receipt of the
cancellation letter by the insured is not required by statute.
In Allstate Ins. Co. v. Nationwide Ins. Co., this Court rejected the notion the
insured must be provided actual notice. Allstate Ins. Co. v. Nationwide Ins. Co., 82
N.C. App. 366, 346 S.E.2d 310, (1986). This Court held a cancellation was effective
because “[u]nder North Carolina law, and under the policy language contained in the
policy at issue, proper mailing of the cancellation notice is all that is required to cancel
the policy.” Id. at 369-70, 346 S.E.2d at 312-313.
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TYSON, J., dissenting
Here, Nationwide properly followed the plain meaning of the statute by using
its mailing protocol to timely cancel this policy. Nationwide need not guarantee
receipt by plaintiffs. Had the General Assembly wanted to burden an insurer under
the facts before us with the additional responsibility of proving actual receipt by the
insured, it clearly knew how to so require and would have drafted and enacted the
statute to so provide. The trial court properly concluded Nationwide’s proof of mailing
sufficiently satisfied the statutory requirements.
C. Nationwide’s Policy
Similar to N.C. Gen. Stat. § 58-41-15, Nationwide’s policy grants it the absolute
right to cancel a policy within sixty days of issuance:
2. We may cancel this policy only for the reasons stated
below by letting you know in writing of the date
cancellation takes effect. This cancellation notice may be
delivered to you, or mailed to you at your mailing address
shown in the Declarations. Proof of mailing will be
sufficient proof of notice.
....
(b) When this policy has been in effect for less than 60 days
and is not a renewal with us, we may cancel for any reason
by letting you know at least 10 days before the date
cancellation takes effect.
Plaintiffs’ assertion that they never received the letter is not determinative of
this issue. The testimony at trial indicates Nationwide used a mailing system and
protocols to ensure each piece of mail, especially those containing important notices
such as notices of cancellation, were furnished to the insured that evidences the
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statutory and policy requirements. Nationwide provided prior written notice to the
plaintiffs of the impending policy cancellation by mailing a letter explaining the policy
would be terminated. The policy explicitly stated proof of mailing served as proof of
sufficient notice. Although plaintiffs purportedly never received the letter, detailed
testimony of the mailing protocol, the cashed premium check, and the discontinued
drafting from plaintiffs’ account corroborates the proper cancellation under the policy
and the statute.
The “mailbox rule” also “creates a rebuttable presumption that an envelope
sent via the postal service with proper postage was delivered to the intended party.”
Nationwide Prop. & Cas. Ins. Co. v. Martinson, 208 N.C. App. 104, 116, 701 S.E.2d
390, 398 (2010) (citations omitted). Here, the testimonial evidence shows the
cancellation letter had been sent with the proper postage to plaintiffs’ address.
In accordance to the mailbox rule, there is a rebuttable presumption the letter
sent via the Nationwide mailing procedures through the postal service was delivered
to plaintiffs. Id. Plaintiffs failed to rebut this presumption and explain their cashing
of the returned premium check for this policy and the discontinued drafting of
premiums from their checking account.
The impact of the majority’s interpretation of “furnishing” to require actual
receipt of cancellation notice by plaintiffs of policies issued less than sixty days will
decrease the willingness of insurers to provide immediately binding insurance
9
HA V. NATIONWIDE GENERAL INS. CO.
TYSON, J., dissenting
coverage. Judicially imposing a requirement on insurers to guarantee delivery to or
receipt of a cancellation letter during underwriting of new policies issued less than
sixty days will lead to greater costs and decreased availability of insurance coverage.
These added costs of guaranteed receipt to cancel by the insurer will inevitably
be passed onto consumers. Imposing judicially required certified mailing or other
independent verification also interferes with the insurance company’s policy and the
parties’ freedom of contract.
III. Conclusion
N.C. Gen. Stat. § 58-41-15(c) provides that a policy, which has been in effect
for less than sixty days, may be cancelled for any reason so long as the insurer
furnishes prior written notice. Nationwide properly provided notice by timely mailing
a letter of notification to plaintiffs.
The plain meaning of the words “furnish” or “furnishing” does not include nor
compel actual “delivery to” or “receipt of” notice as the majority’s opinion holds.
Furnish means “to provide.” In mailing the letter to the designated address,
Nationwide clearly provided and furnished timely notice to plaintiffs, effectively and
timely cancelling their policy and giving them the opportunity to pursue other
insurance coverage.
10
HA V. NATIONWIDE GENERAL INS. CO.
TYSON, J., dissenting
The trial court correctly found the policy had been cancelled effective 6 June
2015 in compliance with N.C. Gen. Stat. § 58-41-15 and with terms of the Nationwide
policy. The trial court’s order is correctly affirmed. I respectfully dissent.
11