Dungee v. Nationwide Mutual Insurance

424 S.E.2d 234, 108 N.C. App. 599, 1993 N.C. App. LEXIS 94

Opinion

WALKER, Judge.

The first question to be decided is whether all the claimants are entitled to aggregate or “stack” the UM coverage limits on each of the three vehicles insured under the Allen policy.

I.

Defendant Nationwide contends the claimants are not entitled to stack the UM coverage limits under the Allen policy since (1) G.S. § 20-279.21 does not mandate UM stacking and (2) the language of the Allen policy does not allow stacking. According to defendant, the claimants are only entitled to UM coverage in the amount of $50,000 per person with a limit of $100,000 per accident, these amounts representing the amount of coverage on the Allen vehicle involved in the accident. We find merit in defendant’s contentions.

Our Supreme Court has recently held that North Carolina law does not mandate intrapolicy stacking of UM insurance. Lanning v. Allstate Insurance Co., 332 N.C. 309, 420 S.E.2d 180 (1992). According to the Court, while G.S. § 20-279.21 of the Motor Vehicle Safety and Financial Responsibility Act requires stacking of underin-sured motorist (UIM) coverage, there is no corresponding statutory provision applicable to UM coverage. However, despite the fact that “the Act does not require intrapolicy stacking of UM coverages, neither does it prohibit such stacking.” Id. at 316, 420 S.E.2d at 185.

Under Lanning, the claimants in the present case can stack the UM coverages in the Allen policy if its provisions allow stacking. When the meaning of a particular policy provision is uncertain or capable of several reasonable interpretations, the doubts will be resolved against the insurance company and in favor of the policyholder. Woods v. Nationwide Insurance Co., 295 N.C. 500, 246 S.E.2d 773 (1978). Therefore, “[w]hen policies ... contain language that may be interpreted to allow stacking of UM coverages on more than one vehicle in a single policy, insureds are contractually entitled to stack.” Lanning at 316, 420 S.E.2d at 185. However, if the insurance policy clearly does not allow stacking, then the courts must enforce the contract as written. Lanning v. Allstate, supra. In the case sub judice, the Allen policy provides:

The limit of bodily injury liability shown in the Declarations for “each person” for Uninsured Motorists Coverage is our maximum limit of liability for all damages for bodily injury sustained by any one person in any one auto accident. Subject to this limit for “each person”, the limit of bodily injury liability shown in the Declarations for “each accident” for Uninsured Motorists Coverage is our maximum limit of liability for all damages for bodily injury resulting from any one accident. . .. This is the most we will pay for bodily injury ... regardless of the number of:

1. Covered persons;

2. Claims made;

3. Vehicles or premiums shown in the Declarations; or

4. Vehicles involved in the accident.

We believe that this language is clear and capable of only one interpretation: that intrapolicy stacking of the UM insurance in the Allen policy is prohibited. Our decision finds support in the recent Lanning decision. In that case, the Supreme Court considered language in an Allstate policy virtually identical to the language in the present Nationwide policy and the Court there held the policy prohibited intrapolicy UM stacking. Therefore, we find the claimants cannot stack the UM coverage in the Allen policy and the maximum UM coverage available under that policy is $50,000 per person with a limit of $100,000 per accident.

II.

We now address the second issue of this appeal which is whether any amount payable under the Dungee UM policy is to be reduced by the amount paid pursuant to the Allen policy.

It is agreed that Kenneth Dungee was an “insured” for purposes of UM coverage under the Allen policy. Also, plaintiffs Dungee are one of four claimants to the $100,000 per accident coverage under the Allen policy.

Nationwide contends that its total liability to plaintiffs Dungee cannot exceed $50,000, an amount representing the aggregate statutorily required coverage under both the Allen and Dungee policies. According to Nationwide, any amount over $50,000 is subject to the terms of the insurance policy. Nationwide bases its argument on two clauses in the Dungee policy. The first clause, known as a “reduction clause,” provides:

Any amount otherwise payable for damages under this coverage shall be reduced by all sums:

1. Paid because of the bodily injury or property damage by or on behalf of persons or organizations who may be legally responsible.

The second clause, known as an “other insurance clause” provides:

If this policy and any other auto insurance policy issued to you apply to the same accident, the maximum limit of liability for your injuries under all the policies shall not exceed the highest applicable limit of liability under any one policy.

This Court has recently addressed the application of two separate policies with UM coverage. In Government Employees Insurance Company v. Herdon, 79 N.C.App. 365, 339 S.E.2d 472 (1986) it was held that an insured could not stack the UM coverages in two policies. There, defendant’s testate (Maria Gunther) died in an accident when an uninsured driver struck the car in which she was a passenger. On the date of the accident, Maria Gunther was an insured under two Government Employees Insurance Company (GEICO) policies. Each of these policies provided UM coverage in the amount of $100,000 per person and $100,000 per accident and contained the following language:

Other Insurance

If this policy and any other auto insurance policy issued to you apply to the same accident, the maximum limit of liability for your injuries under all the policies shall not exceed the highest applicable limit of liability under any one policy.

Pursuant to this language, GEICO refused to pay more than $100,000.

In resolving the controversy, this Court noted the general rule that when a policy’s terms are contrary to the minimum UM coverage required by statute, the statute controls. However, if the UM coverage in the policy exceeds the mandatory minimum amount, the additional coverage is voluntary and governed by the terms of the insurance contract. Based upon these principles, this Court found GEICO only liable for $100,000. “Since the highest limit of liability under either of the policies [$100,000] exceeds the aggregate amount of statutorily required uninsured motorist coverage provided by both policies [$50,000], neither the Financial Responsibility Act nor the holding in Moore applies.” GEICO at 368, 339 S.E.2d at 474.

The Court in GEICO referred to the earlier Supreme Court decision in Moore v. Hartford Fire Insurance Co., 270 N.C. 532, 155 S.E.2d 128 (1967). In Moore, UM coverage was provided under two policies; one covering the vehicle in which plaintiff was a passenger and the other covering a vehicle owned by plaintiffs husband. Both policies provided coverage in the statutory minimum amount. The Court found plaintiff was not limited to recovery under one policy where plaintiff’s loss was greater than the combined minimum statutory limits of the two policies.

We find the rule in GEICO applicable here. Since there are two policies in effect, plaintiffs Dungee are entitled to $50,000 in UM benefits, this amount representing the aggregate minimum statutorily required amount of UM coverage. However, once plaintiffs receive this amount, any additional benefits are subject to the terms of the policies. As applied to the present case, if plaintiffs Dungee receive less than $50,000 under the Allen policy, then the reduction clause in the Dungee policy takes effect and plaintiffs Dungee can then obtain that amount from the Dungee policy necessary for them to receive a total of $50,000 in UM benefits.

Reversed and remanded.

Judges LEWIS and WYNN concur.