IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA22-546
Filed 21 March 2023
Mecklenburg, No. 15-CVS-20506
D&B MARINE, LLC, a Rhode Island Limited Liability Company, Plaintiff,
v.
AIG PROPERTY CASUALTY COMPANY f/k/a CHARTIS PROPERTY CASUALTY COMPANY, Defendant.
Appeal by Plaintiff from final Judgment entered 25 March 2022 by Judge Eric
L. Levinson in Mecklenburg County Superior Court. Heard in the Court of Appeals
21 January 2023.
The Sumwalt Group, by Vernon Sumwalt, and Killeen & Stern, PC, by Robert J. Killeen (pro hac vice) and Robert C. Stern (pro hac vice), for Plaintiff- Appellant.
Cranfill Sumner LLP, by Steven A. Bader, and Steptoe & Johnson LLP by Roger E. Warin (pro hac vice) and John F. O’Connor (pro hac vice), for Defendant-Appellee.
RIGGS, Judge.
Plaintiff, D&B Marine, LLC, appeals from a partial summary judgment and a
judgment entered after a jury trial on breach of contract and negligence claims with
Defendant, AIG Property Casualty Company. Plaintiff claims that Mecklenburg
Superior Court Judge Eric Levinson erred when he granted partial summary
judgment finding that Plaintiff’s claims for common law bad faith and Unfair or D&B MARINE, LLC V. AIG PROP. CAS. CO.
Opinion of the Court
Deceptive Trade Practices (UDTP) under N.C. Gen. Stat § 75-1.1 were untimely.
Plaintiff also claims that the trial court erred when it denied Plaintiff’s request for a
jury instruction on equitable estoppel after allowing Defendant to include the
affirmative defense of a policy exclusion related to rot and deterioration in the jury
instruction and on the jury verdict form. Finally, Plaintiff claims the trial court erred
when it gave a jury instruction regarding whether the sinking of the yacht was a new
“occurrence” rather than one of the two covered occurrences.
After review, we affirm Judge Levinson’s grant of partial summary judgment.
We affirm the trial court ruling denying the requested jury instruction for equitable
estoppel. Finally, we dismiss the final argument because Plaintiff failed to properly
preserve the issue for appellate review.
I. Procedural & Factual History
This claim involves the tale of the unluckiest yacht and the series of
unfortunate events that she encountered. The tale begins in January of 2013 when
Plaintiff renewed an insurance policy with Defendant to provide coverage for its
seventy-two-foot, Goetz custom yacht, Fearless. Fearless was designed by the
renowned naval architect Eric Goetz, who also designed the 1992 America’s Cup
winner, America3. The insurance policy covered damages to, Fearless, and her
contents “caused by an occurrence which happens within the policy period.” The
policy term began 1 January 2013 and was scheduled to run until 1 January 2014.
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Only two days after Plaintiff renewed this yacht insurance policy, Fearless had
her first fateful encounter. While sailing off the coast of St. Thomas in the U.S. Virgin
Islands, Fearless struck a submerged rock. The encounter caused significant damage
to her hull, and she had to be towed to a shipyard in St. Thomas for repairs.
Towards the end of January 2013, Plaintiff notified Defendant of this
unfortunate encounter with a submerged rock, and Defendant accepted coverage for
the claim. The parties vigorously dispute whether Plaintiff or Defendant was
responsible for selecting the repair facilities for the yacht and whether Defendant
should pay for repairs directly or reimburse Plaintiff for the repairs. However, the
parties agree that Defendant issued payments to Plaintiff to cover repair expenses.
In early April 2013, the parties agreed that Fearless should be moved from St.
Thomas to complete the repairs; however, the parties disagreed on where the repairs
should be performed and who should make the decision. Eventually, the decision was
made to move Fearless to the Rybovich shipyard in West Palm Beach, Florida, to
complete the repairs. Before she left on this voyage, her captain discovered a crack
in her hull along the aft section of her keel, in an area that had previously been
repaired. Notwithstanding this crack, Fearless set sail for West Palm Beach, Florida.
During this voyage on 13 March 2013, Fearless had her second unfortunate
event. While she was underway sailing toward the mainland, her previously repaired
rudder fell off. Plaintiff notified Defendant of these additional damages, and
Defendant accepted coverage for the claim to repair the rudder, again. Once Fearless
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finally arrived at the Rybovich shipyard in West Palm Beach, Defendant was
concerned that the damage from the rock encounter had caused water to seep into
the hull resulting in moisture intrusion into the inner balsa, which could lead to long-
term decay. Because of this concern, Rybovich hired a company, Fosters, to evaluate
the damage to the hull. Fosters took a core sample of the hull on 3 July 2013 and
recommended removing a six-foot-by-six-foot section of the hull because its balsa core
was moist. This work was never performed, but it is unclear on this record why the
work was not done. Plaintiff argued at trial that the failure to remove and replace
this moist balsa core ultimately led to the untimely sinking of Fearless. Defendant
argued that the responsibility to contract for and oversee repairs for Fearless was the
responsibility of Plaintiff; it was only responsible for paying for the repairs.
Ultimately, the disputes between the parties regarding responsibility for the
repairs of this unlucky yacht and a new issue—whether she needed a captain on
board during her repairs—led Defendant to cancel the insurance policy on 6
September 2013, while Fearless was still sitting in Rybovich’s yard waiting to be
repaired. However, Defendant acknowledged that it would remain responsible for
the cost of the repairs associated with the 3 January 2013 rock encounter and the 13
April 2013 rudder incident. Eventually, Plaintiff moved Fearless to Cracker Boy
shipyard and completed the repairs towards the end of 2013.
We include the next portion of Fearless’ tale because it is the story that the
jury considered in deciding the issues that bear on this appeal. While Fearless had
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at least one uneventful voyage after the repairs were complete, it was not long until
she has another unfortunate encounter. In October of 2014, the unlucky Fearless
was docked near New Brunswick, Georgia, when she was struck by lightning and
again suffered substantial damage. Only a few days before this lightning strike,
Plaintiff had executed a new insurance policy for Fearless with a separate insurance
company, Great Lakes Reinsurance (“Great Lakes”). After the lightning strike,
Fearless motored to Savannah, Georgia, where she again underwent repairs,
primarily to the electrical systems. The repairs for these damages were not completed
until early 2016. Great Lakes paid for most of the damages associated with this
lightning strike.
While Fearless was being repaired after the lightning strike, Plaintiff filed this
suit against Defendant in Mecklenburg County Superior Court for a single cause of
action, breach of contract. The original suit was based upon failure to pay the full
value of the insured loss for the damage associated with the 3 January 2013 rock
encounter.
When the repairs from the lightning strike were complete, Fearless embarked
on her final fateful voyage. In the early morning of 9 March 2016, she set sail from
Georgia and headed to Charleston, South Carolina. Early that afternoon, Fearless
began taking on water. The captain, Scott Sale, dropped anchor and called for Coast
Guard assistance. The Coast Guard worked diligently into the night with Captain
Sale attempting to reverse the influx of water and save Fearless. In the early
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morning hours, after all electronics on Fearless had failed and her interior was knee-
deep with water that had a film of acid floating on it, the Coast Guard finally ordered
the captain and his mate off poor Fearless. Fearless eventually sank into the
Intracoastal Waterway. She was later found several nautical miles from where she
was anchored with her massive keel missing.
After the 2016 demise of Fearless, Great Lakes filed a claim against Plaintiff
in Federal Court, Western District of North Carolina, regarding Plaintiff’s insurance
claim for the total loss of Fearless; Plaintiff made a counterclaim for breach of
contract, bad faith, and UDTP against Great Lakes on 4 August 2016. In Plaintiff’s
counterclaim with Great Lakes, it asserted that the total loss of Fearless was because
she ran aground on 9 March 2016, and not because of the earlier damage from 2013.
In its brief for that suit, Plaintiff said “the Coast Guard noticed Fearless ‘bounce’ as
if striking bottom.” Further, Plaintiff stated that in February 2016, after the repairs
on Fearless were completed, it conducted a sea trial to ensure her seaworthiness and
Fearless successfully completed the sea trial without any evidence of damage or
residual effects of the January 2013 incident.
On 30 August 2017, Plaintiff amended its complaint in this action to add a
cause of action for negligence, alleging that Defendant had breached its duty to
ensure that all repairs were properly performed, and the vessel was seaworthy.
Defendant filed an answer to the amended complaint on 20 November 2017. The trial
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court stayed the action in this claim on 30 January 2018, pending the resolution of
the federal case with Great Lakes.
Almost two years later, on 5 September 2019, Plaintiff moved the court for a
motion to amend the previously amended complaint under Rule 15 of the North
Carolina Rules of Civil Procedure to add claims for common law bad faith and UDTP;
Defendant opposed the motion. Superior Court Judge Louis Trosch held a hearing
on the motion. During the hearing, Judge Trosch stated that the strongest argument
to deny the motion to amend was futility. The transcript of the hearing does not
include any analysis of whether the amendment would relate back per Rule 15(c) of
the North Carolina Rules of Civil Procedure. Since the parties disputed whether the
claim was controlled by maritime law or North Carolina law, Judge Trosch indicated
that it was not clearly evident if the amendment would be futile. Judge Trosch
allowed the amendment, while noting that if the amendment was futile, the issue
could be addressed at the motion to dismiss stage or at summary judgment.
Additionally, in the written order, Judge Trosch stated the finding was based upon
the liberal standard of Rule 15(a) of the North Carolina Rules of Civil Procedure. The
written order did not address the relation back issue found in Rule 15(c).
Plaintiff filed their second amended complaint on 22 October 2019. Defendant
filed its answer to this amended complaint on 20 December 2019. In the response,
Defendant included twenty-seven affirmative defenses, including statute of
limitations and terms of the policy.
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Over a year later, in February and March 2021, both parties moved for
summary judgment. In its motion for partial summary judgment, Defendant argued
that the claims for common law bad faith and UDTP were untimely. Additionally,
Defendant argued that if the claims were timely, the court should still grant summary
judgment because the claims are not valid under maritime law. In its response,
Plaintiff argued that its original complaint gave sufficient notice of the events or
transactions which produced the claims of common law bad faith and UDTP;
therefore, the amended complaint should relate back to the date of the original
complaint making the claims timely.
On 26 March 2021, Superior Court Judge Eric Levinson1 held a virtual hearing
on the motions for summary judgement; however, there is no transcript of this
hearing in the record. Judge Levinson granted partial summary judgment in favor
of Defendant finding that the original pleadings did not give notice of the
transactions, occurrences, or series of transactions or occurrences to be proven in the
amended pleading. Therefore, the bad faith and UDTP claims did not relate back
under Rule 15(c) of the North Carolina Rules of Civil Procedure and were untimely.
In that order, filed 27 May 2021, Judge Levinson indicated that the parties agree that
Judge Trosch did not rule on “whether UDTPA and bad faith claims would ‘relate
back’ under Rule 15 of the N.C. Rules of Civil Procedure notwithstanding that
1 The Honorable Judge Eric L Levinson was designated to oversee the rest of this case under Rule 2.1 of the General Rules of Practice for Superior and District Courts on 3 December 2020.
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[c]ourt’s permission to amend the complaint to add the extra-contractual claims.”
Judge Levinson did not address the additional grounds regarding the conflicts of law
issues or otherwise make any rulings implicating Judge Trosch’s Rule15(a) order.
On 10 June 2021, Plaintiff moved for reconsideration of the order arguing that
when Judge Trosch granted the motion to amend, he had ruled that the bad faith and
UDTP claims relate back under Rule 15(c). Judge Levinson denied the motion for
reconsideration on 7 July 2021. Plaintiff timely noticed appeal on this issue on 27
July 2021 and then filed an unopposed motion to dismiss the appeal without prejudice
on 20 December 2021.
The case proceeded to a jury trial on claims of breach of contract and negligence
as to whether Plaintiff was entitled to coverage from Defendant under its 2013 Policy
for the 2016 sinking of Fearless. The trial judge held a jury charge conference with
the parties that lasted from 2 March until 3 March 2022 and included a series of
emails and an unrecorded phone conference in the evening on 2 March 2022. During
the charge conference, the trial court allowed Defendant to add an affirmative
defense, related to a policy exclusion for damage associated with gradual or sudden
loss from deterioration, to the jury instructions and the verdict form. Plaintiff then
requested that it be allowed to include a jury instruction for equitable estoppel
because Defendant should not be allowed to rely on a policy exclusion for
deterioration if its independent adjuster knew about the deterioration but did not
notify Plaintiff. The trial judge denied that request.
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At the close of the charge conference, Plaintiff made one objection to the jury
instructions. Plaintiff requested a directed verdict on the “anti-concurrent clause
exclusion” in the jury charge and on the verdict sheet and objected to the submission
of the charge to the jury. The anti-concurrent exclusion clause, stated in Issue 1B on
the verdict form, asked the jury to decide if the sinking of Fearless “was also
attributable to or resulted directly or indirectly, in whole or in part or in combination
with any other cause or causes, from deterioration or rot of the balsa core in the hull
of S/V Fearless.” Plaintiff argued that Defendant was equitably estopped from
asserting this contract exclusion because any deterioration was caused by the
misrepresentations of Defendant’s independent contractor when they did not notify
Plaintiff of the moist balsa in the hull. Neither party objected to the jury instructions
after they were given.
Issue 1A on the jury form asked the jury: “Was the total loss of the S/V Fearless
on or about March 9, 2016, caused by an ‘occurrence’ as that term is defined in the
defendant’s insurance policy?” The jury answered no to this question.2 The form
instructed the jury not to answer any remaining questions if they answered no on the
first issue. The trial court entered a judgment based upon this jury verdict on 23
March 2022.
2 Because this jury found that the sinking was not caused by one of the 2013 occurrences and there was no decision in the earlier suit on whether she ran aground in 2016, the ultimate cause of Fearless’ demise will forever remain a mystery.
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Plaintiff properly noticed appeal on 22 April 2022 from that judgment.
II. Analysis
Plaintiff appeals Judge Levinson’s grant of partial summary judgment that
Plaintiff’s claims for bad faith and UDTP were untimely. Additionally, Plaintiff
assigns two errors to the jury instructions. First, Plaintiff argues that the trial court
erred when it denied Plaintiff’s request for an equitable estoppel instruction after it
allowed Defendant to include a specific policy exclusion in the jury instructions and
verdict form. Second, Plaintiff argues that the trial court erred when instructing the
jury that the sinking of Fearless had to be, according to Plaintiff’s telling, a new
occurrence rather than the result of one of the two admitted occurrences that
happened during the policy term.
A. Partial Summary Judgment
First, Plaintiff argues that Superior Court Judge Levinson erred when he
granted a partial summary judgment in favor of Defendant on the issues of common
law bad faith and UDTP when another Superior Court judge had granted Plaintiff’s
Motion for Leave to Amend their pleading to add these claims. We disagree.
1. Standard of Review
The parties present conflicting standards of review for this issue. Plaintiff asks
this Court to consider whether the trial court abused its discretion when Judge
Levinson held that the amendment allowed by Judge Trosch did not “relate back” to
the original amended pleading. See Calloway v. Motor Co., 281 N.C. 496, 501, 189
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S.E.2d 484, 488 (1972) (noting the standard of review for motions to amend is abuse
of discretion).
Defendant argues that this Court should review the summary judgment order
by Judge Levinson de novo. See Forbis v. Neal, 361 N.C. 519, 524, 649 S.E.2d 382,
385 (2007) (noting the standard of review for summary judgment is de novo).
Judge Trosch’s order on 28 October 2019 was silent on the issue of whether the
new claims of common law bad faith and UDTP would “relate back” to the amended
complaint under Rule 15(c) of the North Carolina Rules of Civil Procedure. Further,
in the order granting partial summary judgment, Judge Levinson clearly stated that
the parties agree that Judge Trosch did not rule whether the bad faith and UDTP
claims would “relate back” under Rule 15(c).3 Therefore, because Judge Trosch did
not resolve the issue, both parties conceded as much, and the ruling actually appealed
is Judge Levinson’s grant of partial summary judgment, we apply de novo review to
that order.
2. Analysis
The well-established rule in North Carolina is that no appeal lies from one
Superior Court judge to another; and that ordinarily, one judge may not modify,
overrule, or change the judgment that another Superior Court judge previously made
3 In their motion for reconsideration, Plaintiff denies agreeing that Judge Trosch did not rule on the issue of whether the amendment related back but there is no transcript of that hearing in the record.
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in the same action. Calloway, 281 N.C. at 501, 189 S.E.2d at 488. However,
modifications or changes to an interlocutory order, such as an order granting pleading
amendment, are proper where (1) the order is discretionary and (2) there has been a
change of circumstances. Stone v. Martin, 69 N.C. App. 650, 652, 318 S.E.2d 108, 110
(1984). This rule, known as the Calloway rule, protects the integrity of the court
system, and we, therefore, consider the circumstances in the matter carefully so as
not to disturb the integrity of this rule. State v. Woolridge, 357 N.C. 544, 549-50, 592
S.E.2d 191, 194 (2003).
Plaintiff argues that this Court should apply the Calloway rule to protect
Judge Trosch’s ruling, which allowed the amendment, from Judge Levinson’s
summary judgment ruling that dismissed the claims added by the amendment. In
this appeal, Plaintiff argues that because Judge Trosch granted the motion to amend,
the amendment “automatically” relates back based upon the use of the word “deemed”
in the language of Rule 15(c). N.C. R. Civ. P. 15(c) (2022). However, the plain
language of the statute and the case law, do not support the argument that the
amendment automatically relates back. Further, in this case, we hold that the
Calloway rule is not applicable because Plaintiff waived a Calloway analysis by
encouraging Judge Trosch to grant the motion to amend its pleading while reserving
resolution regarding the validity of the new claim for a later hearing and then inviting
Judge Levinson to consider the issue of relation back.
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In a Request for Motion to Amend under Rule 15(a), judges construe the rule
liberally to allow amendments where the opposing party will not be materially
prejudiced. Delta Env. Consultants of N.C. v. Wysong & Miles Co., 132 N.C. App. 160,
165, 510 S.E.2d 690, 694 (1999). This Court has determined that the proper reasons
for denying a motion to amend include undue delay by the moving party, unfair
prejudice to the nonmoving party, bad faith, futility of amendment, and repeated
failure to cure defects by previous amendment. Bob Timberlake Collection, Inc. v.
Edwards, 176 N.C. App. 33, 45, 626 S.E.2d 315, 325 (2006).
Separately, under Rule 15(c), a claim asserted in an amended pleading is
deemed to have been interposed at the time the claim in the original pleading was
interposed, unless the original pleading does not give notice of the transactions,
occurrences, or series of transactions or occurrences, to be proved pursuant to the
amended pleading. N.C. R. Civ. P. 15(c) (2022) (emphasis added). Whether an
amended complaint will relate back to the original complaint does not depend upon
whether it states a new cause of action but instead upon whether the original
pleading gave defendants sufficient notice of the proposed amended claim. Bowlin v.
Duke University, 119 N.C. App. 178, 184, 457 S.E.2d 757, 761 (1995). This Court has
held that a motion to amend is not deemed to have been interposed at the time of the
original pleading if the original pleading does not give notice of the transaction,
occurrences, or series of transactions, to be proved pursuant to the amended pleading.
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State Farm Fire & Cas. Co. v. Darsie, 161 N.C. App. 542, 546, 589 S.E.2d 391, 395-96
(2003).
At the Motion to Amend hearing, the parties agreed that undue delay, bad
faith, and repeated failure to cure defects did not apply to the facts of the proposed
amendment. Defendant argued that allowing the amendment would be unfairly
prejudicial because the case had been stayed for such a long time. Judge Trosch did
not find that allowing the amendment would be unduly prejudicial because both
parties agreed to the stay. Defendant also argued that the amendment was futile
because Plaintiff was applying the wrong law to the case. Plaintiff argued that per
Wilburn Boat Co. v. Fireman's Fund Insurance Co., the regulation of marine
insurance belongs to the States; therefore, its claims for common law bad faith and
UDTP, which flow from the breach of contract claim for the 3 January 2013
occurrence, are allowed by North Carolina state law. 348 U.S. 310, 321, 99 L. Ed.
337, 346 (1955). Conversely, Defendant argued that per Wilburn Boat Co., state law
only applies to maritime insurance contracts in the absence of an applicable federal
admiralty law; since a claim for UDTP conflicts with admiralty law, it is prohibited.
Id. at 320, 99 L. Ed. at 346; See also Delta Marine, Inc., v. Whaley, 813 F. Supp. 414,
417 (E.D.N.C. 1993) (dismissing a claim under the North Carolina UDTPA because
it conflicts with requirements for awarding punitive damage under admiralty law).
Further, Defendant argued that the standard for bad faith in North Carolina is lower
than the punitive threshold under admiralty law, so the bad faith claim similarly
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fails. While Plaintiff argued that its amendment would not be futile, it proposed that
the issues “may be best for a 12(b)(6) hearing where we can have a full lecture on
admiralty law versus state law.” Without resolving the conflicts of law issue, Judge
Trosch stated that it was not clearly evident whether the amendment would be futile.
The transcript of the motion to amend hearing does not include any discussion
of whether the original (amended) complaint dated 24 August 2017, which only
included claims for breach of contract and negligence, gave notice of the transaction,
occurrences, or series of transaction or occurrences, to be proved in the second
amended complaint which included additional claims for bad faith and UDTP based
upon the sinking of Fearless. Additionally, North Carolina Rules of Civil Procedure
9(b) and (k) establish special pleading requirements for fraud and punitive damages.
This Court has held that when a claim requires unique factual allegations, those
allegations must be present in the original complaint to meet the requirements of
Rule 15(c) so that the amended complaint relates back to the original complaint.
State Farm Fire & Cas. Co., 161 N.C. App. at 546, 589 S.E.2d at 395.
The record is clear that at the close of the Motion to Amend hearing, Judge
Trosch left open issues for resolution in future hearings; it is not clear from the
transcript that the parties even argued the issue of whether the amendment would
relate back to the amended complaint dated 24 August 2017. Additionally, in his
written order allowing the amendment, Judge Trosch specifically stated he was
“appl[ying] the liberal standard of Rule 15(a).” (emphasis added) Therefore, the
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record related to the Motion to Amend hearing supports the conclusion that Judge
Trosch did not make a finding on whether the new claims relate back to the original
claims under Rule 15(c).
Seventeen months later, both parties made motions for summary judgment.
Defendant requested the trial court grant summary judgment for the claims of UDTP
and bad faith on two grounds. First, the claims were untimely under the applicable
statute of limitations. Second, the claims conflicted with substantive admiralty law.
At no point in the briefing for summary judgment did Plaintiff allege that the
issue of whether the amendment related back had been previously decided by Judge
Trosch, nor did Plaintiff argue that the Calloway rule was applicable. In fact, in its
responsive brief, Plaintiff invited Judge Levinson to consider the issue of relation
back.
Applying this standard, the [c]ourt can determine whether the claims asserted by D&B Marine in its [Second] Amended Complaint relate back to the date it filed its Original [Amended] Complaint by a comparison of the allegations in each of the Complaints.
Plaintiff then goes on to compare its original (amended) complaint and its second
amended complaint to demonstrate that the original complaint gave notice of the
events or transactions which produced the claim to enable Defendant to understand
its nature and basis as required to establish relation back. Pyco Supply Co. v.
American Centennial Ins. Co., 321 N.C. 435, 442, 364 S.E.2d 380, 384 (1988).
(observing under the notice theory of pleading, a statement of a claim is adequate if
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it gives sufficient notice of the events or transaction which produced the claim to
enable the adverse party to understand the nature and basis and to file a responsive
pleading).
Further, while the record does not include a transcript of the summary
judgment hearing, in his summary judgment order, Judge Levinson stated:
the parties agree that Superior Court Judge Louis Trosch did not rule on whether the UDTPA and bad faith claims would “relate back” under Rule 15 of the N.C. Rules of Civil Procedure notwithstanding the [c]ourt’s permission to amend the complaint to add extra contractual claims – and the parties agree this legal issue is before this [c]ourt.
Based upon the briefs and the hearing, Judge Levinson granted Defendant’s motion
for partial summary judgment, finding that the original pleadings did not give notice
of the transactions, occurrences, or series of transactions or occurrences to be proved
pursuant to the amended pleadings.
After this ruling, in the motion for reconsideration of summary judgment and
in this appeal, Plaintiff impermissibly “switched horses” and argued that the act of
granting the motion to amend “automatically” causes the amendment to relate back
because of the word “deemed” in Rule 15(c). Jacobs v. Physicians Weight Loss Ctr. of
Am., Inc., 173 N.C. App. 663, 678, 620 S.E.2d 232, 242 (2005) (“It is axiomatic with
us that a litigant must be heard here on the theory of the trial below and he will not
be permitted to switch horses on his appeal.” (quoting Graham v. Wall, 220 N.C. 84,
94, 16 S.E.2d 691, 697 (1941))). The argument that granting a motion to amend
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“automatically” causes an amendment to relate back does not align with the clear
language of the statute or the case law. In Rule 15(c), the language includes a
subordinate clause beginning with the word “unless” which limits the universe of
scenarios where an amendment will relate back. N.C. R. Civ. P. 15 (2022). An
amendment cannot “automatically” relate back when there are scenarios under which
the amendment does not relate back. This Court has identified circumstances where
an amendment does not relate back to the original complaint, including where the
original complaint did not include the specialized pleading requirements for claims
in the amended complaint. See State Farm Fire & Cas. Co., 161 N.C. App. at 589,
S.E.2d at 395.
The Calloway rule represents an important principle in maintaining respect
for the rule of law, and reducing gamesmanship in litigation; for these reasons, we
will not do anything to disrupt or undermine the rule. Here, however, Plaintiff
appears to be engaging in the very gamesmanship that the rule was intended to avoid.
Because Plaintiff encouraged Judge Trosch to grant the motion to amend without
resolving all issues related to the validity of the amendment and invited Judge
Levinson to consider the issue of relation back at summary judgment, we find that
the issue was properly in front of Judge Levinson at the summary judgment hearing.
The Calloway rule is inapplicable.
We therefore affirm Judge Levinson’s grant of partial summary judgment.
B. Jury Instructions on Equitable Estoppel
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Next, Plaintiff argues that the trial court made a reversible error when it refused
Plaintiff’s request for an instruction on equitable estoppel after allowing Defendant
to include the affirmative defense of a specific policy exclusion in the jury instructions
and verdict form related to damages from rot and deterioration. We disagree, holding
there was no error, and noting that even if it were an error, Plaintiff failed to show
prejudice.
For an appeal of jury instructions, this Court considers the jury charge
contextually, in its entirety, and the party asserting the error bears the burden of
showing that the jury was misled or that the verdict was affected by an omitted
instruction. Hammel v. USF Dugan, Inc., 178 N.C. App. 344, 347, 631 S.E.2d 174,
177 (2006) A specific jury instruction should be given when: “(1) the requested
instruction was a correct statement of law and (2) was supported by the evidence, and
that (3) the instruction given, considered in its entirety, failed to encompass the
substance of the law requested and (4) such failure likely misled the jury.” Outlaw v.
Johnson, 190 N.C. App. 233, 243, 660 S.E.2d 550, 559 (2008). Failure to give a
requested and appropriate jury instruction is a reversible error if the requesting party
is prejudiced as a result of the omission. Id.
On appeal, Plaintiff argues that trial court had a “nondiscretionary duty” to
provide a jury instruction on equitable estoppel after it allowed Defendant to include
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the affirmative defense4 of a policy exclusion regarding responsibility for damages
associated with deterioration on the verdict form. However, a jury instruction for
equitable estoppel on an insurance policy exclusion does not align with North
Carolina case law. Further, because the jury never reached the issue of whether the
insurance policy exclusion applied to the facts of this case, Plaintiff cannot
demonstrate that the denial of the jury instruction resulted in prejudice.
Our Supreme Court has established that the doctrines of waiver and estoppel
are not available to bring within the coverage of a policy risks that are not covered by
its terms or risks expressly excluded. See Hunter v. Insurance Co., 241 N.C. 593, 595-
96, 86 S.E.2d 78, 80 (1955) (holding estoppel can have a field of operation only when
the subject matter is within the terms of the contract but cannot radically change the
terms of the policy).
Here, Plaintiff requested a jury instruction that equitable estoppel would
preclude Defendant from using an insurance policy exclusion to expand the coverage
of the insurance policy to include rot and deterioration because Defendant’s
representative did not notify Plaintiff of the moist balsa in the hull during the repairs
to the 2013 damage. The policy that Plaintiff and Defendant executed stated:
There shall be no insurance under Part III – Property Coverage for any loss, damage, claim or expense attributable to or resulting directly or indirectly, in whole
4 Plaintiff refers to this as an unpled affirmative defense, however Defendant’s answer includes an affirmative defense of terms of the policy.
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or in part or in combination with any other cause or causes from: • Gradual or Sudden Loss
Osmosis, blistering, fiberglass or surface coat blistering, electrolysis, delamination, rust, corrosion or oxidation, marine life, marine borers, moth or vermin, rot, fungi, mold or infestation, warping or shrinkage, change of temperature or humidity, deterioration, lack of maintenance, wear and tear or inherent vice.
The policy clearly excluded damages due to rot, deterioration, and delamination from
the scope of the policy; therefore, Plaintiff cannot use equitable estoppel to bring that
within the scope of the policy. For that reason, the jury instruction on equitable
estoppel would not be a correct statement of the law, and the trial court did not err
when it denied the request to include a jury instruction on equitable estoppel.
Assuming, arguendo, that the refusal to give the equitable estoppel instruction
was error, Plaintiff has failed to show that the refusal resulted in prejudice. The
requested equitable estoppel instruction applied to whether the policy exclusion for
rot and deterioration was applicable to the facts of the case, which was part of issue
1B on the jury verdict form. Since the jury concluded in issue 1A that the loss of
Fearless was not caused by an “occurrence” as the term was defined in the insurance
policy, the verdict form directed them not to reach a conclusion on any remaining
issues. Because the jury did not consider issue 1B, Plaintiff cannot demonstrate that
the requested instruction would result in a different outcome in the trial.
Accordingly, we affirm the trial court ruling.
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C. Jury Instruction on “occurrence”
Plaintiff’s final argument is that the trial court erred in instructing the jury
and on the verdict form that the sinking of Fearless had to result from a new
“occurrence” instead of the result of one of the two covered occurrences that happened
during the policy term. However, Plaintiff did not object to any specific language at
the close of the jury conference regarding the term “occurrence” nor did they object to
the jury charge after the jury instructions were concluded.
Rule 10(a)(2) of the North Carolina Rules of Appellate Procedure specifically
address challenges to jury instructions and provides that:
A party may not make any portion of the jury charge or omission therefrom the basis of an issue presented on appeal unless the party objects thereto before the jury retires to consider its verdict, stating distinctly that to which objection is made and the grounds of the objection; provided that opportunity was given to the party to make the objection out of the hearing of the jury, and, on request of any party, out of the presence of the jury.
N.C. R. App. P. 10(a)(2) (2022) (emphasis added). Where a portion of the charge is
challenged, it must be identified in the record on appeal by clear means of reference.
Durham v. Quincy Mutual Fire Ins. Co., 311 N.C. 361, 367, 317 S.E.2d 372, 377
(1984).
Here, the record reveals that the trial court provided the parties with the
opportunity to make objections to the jury instructions at the close of the charge
conference and after the jury instructions were delivered. The record is clear that
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both parties voiced disagreement with the decisions of the trial court during this
charge conference. However, at the conclusion of the charge conference, only one
objection was placed on the record.
[PLAINTIFF’S COUNSEL]: Plaintiff D&B Marine moves for a directed verdict on the anti-concurrent clause exclusion, which is in the jury charge and the verdict as Issue 1B. There is no evidence and [Defendant] is relying upon its own breach of its contractual policy to invoke this exclusion. Therefore, on behalf of [P]laintiff D&B Marine, we object to the submission of this charge to the jury.
This objection does not state that it applies to the language around the term
“occurrence.” Neither party made an objection on the record after the Judge read the
instructions to the jury. Further, we find no other support for Plaintiff’s argument
that this matter is preserved for appeal in Plaintiff’s briefing. Accordingly, we
dismiss this issue.
Assuming arguendo that the issue was preserved, Plaintiff does not cite to
specific language in the jury charge or on the jury verdict form that was in error. In
its brief, Plaintiff failed to provide a standard of review for this issue as required in
North Carolina Rules of Appellate Procedure. N.C. R. App. P 28(b)(6) (2022).
Additionally, Plaintiff failed to provide a citation of any authorities upon which they
are relying for the argument as required in Rule 28. Id. Issues where there is no
reason or argument stated will be taken as abandoned. Id. Under our appellate
rules, it is the duty of the appellant to provide sufficient legal authority to this Court
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and failure to do so will result in dismissal. Zhu v. Deng, 250 N.C. App. 803, 810 794
S.E.2d 808, 814 (2016)
The jury charge included the definition of “occurrence” as defined by the
insurance policy executed by the parties. The verdict form asks the jury if the total
loss of Fearless was caused by an occurrence as defined in the insurance policy. There
is no reference to a “new occurrence” in the jury charge or on the jury form. Plaintiff’s
brief contains conclusory statements that the jury could not find that the sinking was
not covered because Defendant had paid for the repairs associated with covered
damages. However, Plaintiff fails to provide reasoning or authorities to support this
conclusion. It is not the duty of the Court to peruse the record, to construct an
argument for the appellant. Person Earth Movers, Inc. v. Thomas, 182 N.C. App. 329,
333, 641 S.E.2d 751, 754 (2007).
Accordingly, we note that if the issue was preserved, we dismiss the issue
because it was not adequately briefed.
III. Conclusion
After a detailed review of the issues presented by both parties, we affirm the
grant of partial summary judgment by Judge Levinson. Further, we affirm the trial
court’s ruling on the jury instruction for equitable estoppel. Finally, we dismiss the
issue on the jury instruction for “occurrence” because it was not properly preserved
for appeal.
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AFFIRMED IN PART; DISMISSED IN PART.
Judges GORE and STADING concur.
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