Morgan v. State Farm Mutual Automobile Insurance , 129 N.C. App. 200 ( 1998 )

Judge Greene

dissenting.

I agree that State Farm was not required to provide underinsured motorist (UIM) coverage to plaintiffs. This is so because the statute unambiguously requires a liability policy exceeding minimum limits ($25,000 per person/$50,000 per accident) as a prerequisite to UIM coverage. N.C.G.S. § 20-279.21(b)(4) (Supp. 1997). In this case, however, State Farm provided plaintiffs with a “Selection/Rejection Form” (the Notice) which, read in the light most favorable to plaintiffs,² offered them the option of obtaining UIM coverage in the amount of $1,000,000. Plaintiffs selected that option by not returning the form, as per the instructions in the Notice.

The face of the Notice contained the following language: “[UM] and [UIM] coverage options are available to me.” The face of the Notice also stated: “I understand that. . . UM and [UIM] bodily injury limits up to $1,000,000 per person and $1,000,000 per accident are available.” The reverse side of the Notice contained additional language. This language explicitly stated, entirely in capital letters, that it was “ABSOLUTELY NECESSARY THAT YOU COMPLETE, SIGN AND RETURN THE SELECTION/REJECTION FORM IF YOU WANT TO KEEP YOUR CURRENT COVERAGE. OTHERWISE, COVERAGE [UM] OR [UIM] WILL BE PROVIDED WITH BODILY INJURY LIMITS OF $1,000,000 PER PERSON/$1,000,000 PER ACCIDENT.” Language near the bottom of the reverse side of the Notice stated that “[UIM] can be carried only if your Liability (Coverage A) limits for bodily injury are greater than the $25,000 per person/$50,000 per accident required by law.”

The language on the face of the Notice, which states that both “[UM] and [UIM] coverage options are available to me,” contradicts the language on the reverse side of the Notice that “[UIM] can be carried only if your Liability . . . limits for bodily injury are greater than the [minimum] required by law.” This contradiction occurs because plaintiffs only had minimum liability coverage. Furthermore, the language that either UM or UIM coverage in the amount of $1,000,000 will be provided (if the Notice is not returned) contradicts the language that both coverages were available. In light of the ambiguity created by these contradictions it is unclear whether failure to sign and return the Notice would result in (i) an increase to $1,000,000 in plaintiffs’ UM coverage, (ii) an increase to $1,000,000 in plaintiffs’ UIM coverage, (iii) an increase in both UM and UIM coverages to $1,000,000, or (iv) an increase in plaintiffs’ liability coverage beyond the minimum limits and a simultaneous increase to $1,000,000 in UIM coverage. Plaintiffs stated in their affidavits that when they received the Notice, “we wanted the additional [UIM] coverage [and] elected not to sign [the Notice] and did not return [the Notice] to State Farm.” Under these circumstances, the Notice must be construed against State Farm and in favor of plaintiffs, thus providing them with $1,000,000 in UIM coverage. I would therefore reverse entry of summary judgment for State Farm and remand for entry of summary judgment for plaintiffs.

2 . See Silvers v. Horace Mann Ins. Co., 324 N.C. 289, 295, 378 S.E.2d 21, 25 (1989) (“[insurance contracts must be construed against the drafter, which had the best opportunity to protect its interest.”); Woods v. Insurance Co., 295 N.C. 500, 506, 246 S.E.2d 773, 777 (1978) (doubts in the language of an insurance contract will be resolved against the insurance company and in favor of the insured).