J.H. v. Harford Mutual Insurance Group, Inc.

• Court: Court of Appeals for the Fourth Circuit
• Decided: August 8, 2025
• Docket: 23-1733
• Status: Unpublished

Opinion

USCA4 Appeal: 23-1733 Doc: 46 Filed: 08/08/2025 Pg: 1 of 14

UNPUBLISHED

UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

No. 23-1733

J.H., by and through their Guardian Ad Litem, Erica Chambers; E.H., by and through their Guardian Ad Litem, Erica Chambers; ERICA CHAMBERS, individually,

Plaintiff - Appellees,

v.

HARFORD MUTUAL INSURANCE GROUP, INC.,

Defendant - Appellant.

Appeal from the United States District Court for the Middle District of North Carolina, at Greensboro. Thomas D. Schroeder, District Judge. (1:21-cv-00856-LPA)

Argued: March 18, 2025 Decided: August 8, 2025

Before HEYTENS and BERNER, Circuit Judges, and John A. GIBNEY, JR., Senior United States District Judge for the Eastern District of Virginia, sitting by designation.

Affirmed by unpublished per curiam opinion.

ARGUED: William A. Bulfer, Asheville, North Carolina, Daniel Thomas Strong, TEAGUE CAMPBELL DENNIS & GORHAM, LLP, Raleigh, North Carolina, for Appellants. Coleman Cowan, LAW OFFICES OF JAMES SCOTT FARRIN, Durham, North Carolina, for Appellees. ON BRIEF: Kaitelyn E. Fudge, LAW OFFICES OF JAMES SCOTT FARRIN, Durham, North Carolina, for Appellees.

Unpublished opinions are not binding precedent in this circuit. USCA4 Appeal: 23-1733 Doc: 46 Filed: 08/08/2025 Pg: 2 of 14

PER CURIAM:

Erica Chambers was driving with her two minor children on the highway in North

Carolina when they were hit by a truck owned by Big Boss Construction, Inc. After

bringing suit against Big Boss and several other parties involved in the accident, Chambers

filed a declaratory judgment action to establish that Big Boss’s $2 million commercial

excess insurance policy—issued by Harford Mutual Insurance Group, Inc.—provided

coverage for the accident. The district court sided with Chambers and concluded that the

accident fell within the scope of the policy’s coverage. The district court further determined

that Chambers and her children were entitled to pre- and post-judgment interest under the

policy. We affirm both rulings.

I. Background 1

On October 27, 2018, Erica Chambers and her children were severely injured in an

automobile accident as they drove south on North Carolina Highway 49. A truck owned

by Big Boss Construction, Inc. crossed the center of the highway and struck Chambers

head on. The driver of the truck was unauthorized to operate a motor vehicle, as he lacked

a valid driver’s license. The parties agree that at the time of the accident, the driver was an

agent of Big Boss acting within the scope of his employment. The driver was on his way

1 In the litigation agreement discussed infra, the parties “agree[d] that all facts and conclusions of law pled in the Second Amended Complaint in the Underlying Litigation are deemed admitted” for the purpose of this declaratory judgment action. J.A. 207. We thus recite the facts as alleged in that complaint.

2 USCA4 Appeal: 23-1733 Doc: 46 Filed: 08/08/2025 Pg: 3 of 14

to complete a job for a different company, NC Champions Construction, Inc., which was

using the truck with Big Boss’s permission.

Chambers and her children incurred astronomical medical bills as a result of the

accident. Chambers spent 34 days in the hospital recovering from broken bones throughout

her body. She endured multiple surgeries and remains under medical care for her injuries,

some of which are permanent. One of Chambers’s children suffered a head injury and

continues to experience memory problems. Her other child suffered a broken leg. In total,

the family’s medical bills have exceeded $500,000.

Chambers and her children (collectively, Chambers 2) filed suit in North Carolina

state court against the driver, Big Boss, and NC Champions. The suit alleged, among other

claims, that Big Boss was liable for negligently entrusting its truck to the driver.

At the time of the accident, Big Boss carried multiple insurance policies, including

a commercial excess umbrella policy (the Excess Policy) issued by Harford Mutual

Insurance Group, Inc. The Excess Policy had a liability limit of $2 million. It covered

certain bodily injury and property-related losses exceeding the limits of Big Boss’s other

underlying insurance policies. Because the recovery on Big Boss’s underlying auto

insurance policy was capped at $100,000 per accident, Big Boss submitted a claim for

coverage under the Excess Policy. Harford denied that claim, asserting that the accident

was not covered by the policy.

2 Chambers filed suit on behalf of herself and her minor children.

3 USCA4 Appeal: 23-1733 Doc: 46 Filed: 08/08/2025 Pg: 4 of 14

Following Harford’s denial of Big Boss’s coverage claim, Chambers initiated a

declaratory judgment action in North Carolina state court “seeking a declaration that

coverage for the damages alleged in the [underlying lawsuit] exists under . . . [the Excess

Policy].” J.A. 565. The declaratory judgment action also sought a coverage determination

regarding another Harford insurance policy (the Second Policy) not at issue in this appeal.

Harford, which is based in Maryland, invoked diversity jurisdiction and removed the case

to federal court.

While the declaratory judgment action was still pending in federal court, the parties

reached an agreement (the Litigation Agreement) to settle the underlying state court

litigation. Though the Litigation Agreement resolved the state court claims, it did not moot

the declaratory judgment action. Rather, the purpose of the Litigation Agreement was to

“allow [Chambers] . . . to pursue the merits of the insurance coverage issues in the

[declaratory judgment action]” without additional lingering issues complicating the

litigation. J.A. 207.

The Litigation Agreement provided for Chambers to receive $200,000 upfront,

$25,000 of which would be contributed by Harford. Any additional payments, however,

would depend on the outcome of the declaratory judgment action. If the court determined

that the Excess Policy covered the accident, Chambers would receive an additional $2

million from Harford. If the court determined that the Second Policy also provided

coverage, Chambers would receive another $1 million from Harford. Further, the parties

attached to the Settlement Agreement a “Consent Judgment” establishing that Chambers

would be entitled to $3.2 million if they did not timely receive the $200,000 upfront.

4 USCA4 Appeal: 23-1733 Doc: 46 Filed: 08/08/2025 Pg: 5 of 14

After signing the Litigation Agreement, Chambers and Harford filed cross-motions

for judgment on the pleadings in the declaratory judgment action. The critical issue raised

in those motions was whether the Excess Policy covers accident-related losses resulting

from negligent entrustment of an automobile. Harford does not dispute that negligent

entrustment occurred, only whether it is covered by the Excess Policy.

Though the Excess Policy generally covers liability for accidents resulting in bodily

injuries, it contains several exclusions that carve out certain incidents from coverage. One

such exclusion, the Automobile Exclusion, provides that the Excess Policy “shall not apply

to any liability for bodily injury . . . arising out of the ownership, maintenance, operation,

use, loading or unloading of any automobile.” J.A. 186. The Automobile Exclusion does

not expressly address claims of negligent entrustment. The Excess Policy contains a

parallel exclusion governing aircraft and watercraft accidents (the Aircraft/Watercraft

Exclusion). That exclusion specifically forecloses coverage for negligent entrustment

claims relating to aircraft and watercraft accidents. The Aircraft/Watercraft Exclusion

states that the Excess Policy does not apply to injuries “arising out of the ownership,

maintenance, operation, use, loading or unloading or entrustment to others of any aircraft,

unmanned aircraft, or watercraft.” J.A. 167 (emphasis added).

Relying on this difference between the Automobile Exclusion and the

Aircraft/Watercraft Exclusion, the district court determined that the Automobile

Exclusion—unlike the Aircraft/Watercraft Exclusion—was not intended to encompass

claims for negligent entrustment. Thus, the district court concluded that the Excess Policy

5 USCA4 Appeal: 23-1733 Doc: 46 Filed: 08/08/2025 Pg: 6 of 14

provided coverage for the injury-related losses sustained in Chambers’s accident, and it

granted Chambers’s motion for judgment on the pleadings.

Upon determining that the Excess Policy provided coverage for the accident, the

district court asked the parties to submit additional briefing addressing whether Chambers

was entitled to pre- and post-judgment interest on the $2 million award. In arguing that it

did not owe interest, Harford pointed to a provision in the Litigation Agreement stating

that “in no event shall the Harford Insurers be obligated to tender more than . . . $2,000,000

under the [Excess Policy].” J.A. 209. Chambers, however, highlighted a different provision

in the Litigation Agreement stating that “[Harford] specifically agree[s] that this [Litigation

Agreement] . . . in no way relieve[s] [Harford] of any obligation to pay money under the

policies, in the event that the Court determines that the policy or policies provide

coverage.” J.A. 209 (emphasis added). The Excess Policy further states that the insured

shall be indemnified for “pre-judgment interest awarded against the [i]nsured on that part

of any judgment covered under this policy,” and “all interest earned on that part of any

judgment . . . after entry of the judgment and before we have indemnified the insured,

offered to indemnify, or deposited in court” the monies for the judgment. J.A. 148

(emphasis added). Further, the Excess Policy expressly states that interest payments under

these provisions “will not reduce” the limit of the insurance policy—i.e., $2 million. J.A.

148.

After analyzing these separate provisions of the Litigation Agreement and the

Excess Policy, the district court concluded that Harford was obligated to pay pre- and post-

judgment interest to Chambers. Harford filed this appeal challenging the district court’s

6 USCA4 Appeal: 23-1733 Doc: 46 Filed: 08/08/2025 Pg: 7 of 14

determinations that 1) the Excess Policy covered the accident, and 2) Harford owed interest

to Chambers.

II. Standard of Review

We review de novo a district court’s grant of a motion for judgment on the pleadings.

Bakery & Confectionary Union v. Just Born II, Inc., 888 F.3d 696, 701 (4th Cir. 2018).

Where parties file cross-motions for judgment on the pleadings, we consider each motion

separately and review the pleadings in the light most favorable to the party opposing that

motion. See Mercury Sys., Inc. v. S’holder Representative Servs., LLC, 820 F.3d 46, 51 (1st

Cir. 2016); Reprod. Health Servs. v. Strange, 3 F.4th 1240, 1257 (11th Cir. 2021) (citing

Charles A. Wright & Arthur Miller, Federal Practice and Procedure § 1370 (3d ed. 2004 &

Supp. 2019). Here we review only the grant of Chambers’s motion for judgment on the

pleadings. Thus, we evaluate the pleadings in the light most favorable to Harford. Because

the parties have agreed that “all facts and conclusions of law” pled in Chambers’s Second

Amended Complaint are deemed admitted, J.A. 207, we accept those facts as true and draw

all reasonable factual inferences in Harford’s favor. See Burbach Broad. Co. of Del. v.

Elkins Radio Corp., 278 F.3d 401, 405–06 (4th Cir. 2002) (citation omitted).

III. Analysis

a. The Excess Policy Covered the Accident

We begin by analyzing the district court’s determination that the accident was

covered by the Excess Policy. North Carolina rules of contract interpretation dictate that

7 USCA4 Appeal: 23-1733 Doc: 46 Filed: 08/08/2025 Pg: 8 of 14

Harford cannot successfully challenge the district court’s coverage determination unless it

demonstrates that the Excess Policy, read as a whole, unambiguously excludes coverage of

the accident. Under North Carolina law, the burden is generally on the insured to

demonstrate coverage. Nationwide Mut. Ins. Co. v. McAbee, 150 S.E.2d 496, 497 (N.C.

1966). “If the insurer relies on a clause of the policy which excludes coverage,” however,

“the burden is on the insurer to establish the exclusion.” Id.; see also Jenkins v. Aetna Cas.

& Sur. Co., 378 S.E.2d 773, 776 (N.C. 1989).

Harford relies on the Automobile Exclusion, a clause of the Excess Policy that

excludes coverage. North Carolina courts construe exclusion provisions by applying “the

rule that provisions which exclude liability of insurance companies are not favored and

therefore all ambiguous provisions will be construed against the insurer and in favor of

the insured.” State Capital Ins. Co. v. Nationwide Mut. Ins. Co., 350 S.E.2d 66, 68 (N.C.

1986) (emphasis added). “The test in construing the language of the contract (an insurance

policy) is not what the insurer intended the words to mean, but what a reasonable person

in the position of the insured would have understood them to mean.” Marriott Fin. Servs.,

Inc. v. Capitol Funds, Inc., 217 S.E.2d 551, 565 (N.C. 1975).

Recognizing that any ambiguity in the Excess Policy is fatal to its coverage

argument, Harford asserts that the district erroneously looked to irrelevant provisions of

the Excess Policy to “create an ambiguity.” Harford Opening Br. at 30. Harford contends

that the Automobile Exclusion, read in isolation, is “unambiguous and clearly applies to

exclude coverage” for negligent entrustment of an automobile. Id. According to Harford, a

court may not look to other sections of an insurance policy to construe the meaning of a

8 USCA4 Appeal: 23-1733 Doc: 46 Filed: 08/08/2025 Pg: 9 of 14

particular provision that is unambiguous when read in isolation. Harford argues that the

district court thus erred by relying on the Aircraft/Watercraft exclusion to inform its

reading of the Automobile Exclusion.

Harford urges us to employ a method of contract interpretation that is flatly

inconsistent with North Carolina precedent. Though Harford asserts that we must read the

Automobile Exclusion in isolation, the North Carolina Supreme Court has repeatedly

emphasized that insurance policies must be construed as a whole. E.g., Ocean Accident &

Guarantee Corp. v. Piedmont Ry. & Elec. Co., 102 S.E. 636, 637 (N.C. 1920) (“We are

required, in construing this policy, to examine the entire writing, and to base our conclusion

as to its meaning upon the contract as a whole.”); Stanback v. Winston Mut. Life Ins. Co.,

17 S.E.2d 666, 669 (N.C. 1941) (“In determining the intention of the parties to an insurance

policy, the policy should be considered and construed as a whole . . . .” (citation omitted));

DeMent v. Nationwide Mut. Ins. Co., 544 S.E.2d 797, 800 (N.C. 2001) (“Since the

objective of construing an insurance policy is to ascertain the intent of the parties, the courts

should resist piecemeal constructions and should, instead, examine each provision in the

context of the policy as a whole.”).

In arguing for the opposite rule, Harford relies, unconvincingly, on a passage of

Wachovia Bank & Trust Company v. Westchester Fire Insurance Company in which the

North Carolina Supreme Court stated that “[w]here the immediate context in which words

are used is not clearly indicative of the meaning intended, resort may be had to other

portions of the policy and all clauses of it are to be construed, if possible, so as to bring

them into harmony.” 172 S.E.2d 518, 522 (N.C. 1970). Harford asserts that the negative

9 USCA4 Appeal: 23-1733 Doc: 46 Filed: 08/08/2025 Pg: 10 of 14

implication of this statement is that courts may not consider other portions of the policy

unless the immediate context is unclear. Yet subsequent cases of the North Carolina

Supreme Court, including those citing Wachovia, foreclose this strained reading. E.g., State

v. Philip Morris USA Inc., 685 S.E.2d 85, 90 (N.C. 2009) (“Since the object of construction

is to ascertain the intent of the parties, the contract must be considered as an entirety. The

problem is not what the separate parts mean, but what the contract means when considered

as a whole.”); Schenkel & Shultz, Inc. v. Hermon F. Fox & Assocs., P.C., 658 S.E.2d 918,

921 (N.C. 2008) (“The court must construe the contract as a whole and an indemnity

provision must be appraised in relation to all other provisions.” (citations omitted)

(emphasis added)); Christenbury Eye Ctr. v. Medflow, Inc., 802 S.E.2d 888, 892 (N.C.

2017) (“In interpreting contracts, we construe them as a whole.” (citation omitted)).

Construing the Excess Policy as a whole, as we must, we conclude that it does not

unambiguously exclude coverage for negligent entrustment of an automobile. The

Aircraft/Watercraft Exclusion explicitly states that the policy does not apply to injuries

“arising out of the ownership, maintenance, operation, use, loading or unloading or

entrustment to others of any aircraft, unmanned aircraft, or watercraft.” J.A. 167 (emphasis

added). Yet the Automobile Exclusion, which otherwise contains parallel language, makes

no mention of negligent entrustment. Instead, it merely states that the Excess Policy “shall

not apply to any liability for bodily injury . . . arising out of the ownership, maintenance,

operation, use, loading or unloading of any automobile.” J.A. 186. To conclude that the

Automobile Exclusion implicitly encompasses negligent entrustment claims would render

superfluous the words “entrustment to others” in the Aircraft/Watercraft exclusion. This

10 USCA4 Appeal: 23-1733 Doc: 46 Filed: 08/08/2025 Pg: 11 of 14

reading would contravene bedrock principles of North Carolina contract interpretation. In

Wachovia, one of the cases upon which Harford most heavily relies, the North Carolina

Supreme Court instructed that “[e]ach word” of an insurance policy “is deemed to have

been put into the policy for a purpose and will be given effect, if that can be done by any

reasonable construction.” Wachovia, 172 S.E.2d at 522. We cannot ignore that command.

Because the Excess Policy is ambiguous regarding whether it covers claims of

negligent entrustment of an automobile, we construe the policy “against the insurer and in

favor of the insured,” State Capital, 350 S.E.2d at 68, remembering that “the burden is on

the insurer to establish the exclusion.” Id.; see also Jenkins, 378 S.E.2d at 776. Viewing

the Excess Policy through this lens, we conclude that the Automobile Exclusion does not

exclude coverage for liability resulting from negligent entrustment of an automobile. We

thus affirm the district court’s determination that the Excess Policy covered the accident.

b. Pre- and Post-Judgment Interest

Next, we turn to Harford’s contention that the district court erred in awarding pre-

and post-judgment interest to Chambers. Though Harford raises several different

arguments in challenging the district court’s determination, it has waived all but one.

Because we are not persuaded by the sole argument that Harford preserved, we affirm the

district court’s conclusion that Chambers is entitled to pre- and post-judgment interest.

Harford’s primary argument on appeal is that it cannot be required to pay pre- or

post-judgment interest because there was never a “judgment” to which interest could have

attached. As mentioned, the Excess Policy states that it indemnifies the insured for “pre-

judgment interest awarded against the [i]nsured on that part of any judgment covered under

11 USCA4 Appeal: 23-1733 Doc: 46 Filed: 08/08/2025 Pg: 12 of 14

this policy,” and “all interest earned on that part of any judgment . . . after entry of the

judgment and before we have indemnified the insured, offered to indemnify, or deposited

in court” the monies for the judgment. J.A. 148 (emphasis added). Harford argues that the

“Consent Judgment” attached to the Litigation Agreement, which was to be filed only if

Chambers did not timely receive the upfront $200,000 payment, cannot serve as the basis

for pre-judgment or post-judgment interest. 3

The district court found that Harford waived this argument by failing to raise it in

its opening brief. Typically, we review “a district court’s decision to consider a waived

argument for abuse of discretion.” De Simone v. VSL Pharms., Inc., 36 F.4th 518, 531 (4th

Cir. 2022) (citation omitted). In its appellate briefs, however, Harford entirely failed to

address the district court’s waiver decision. Harford thus forfeited any argument that the

district court committed an abuse of discretion. Therefore, we will not review the district

court’s conclusion that Harford waived the argument that there was no “judgment.”

Harford’s second argument against the grant of pre- and post-judgment interest,

which it raises for the first time on appeal, is that Sections 1 and 5 of the Litigation

Agreement indicate that interest cannot be awarded. Because Harford did not raise this

argument at the district court level, we decline to consider it. “When a party in a civil case

fails to raise an argument in the lower court and instead raises it for the first time before

us, we may reverse only if the newly raised argument establishes ‘fundamental error’ or a

denial of fundamental justice.” In re Under Seal, 749 F.3d 276, 285 (4th Cir. 2014) (citation

3 Harford does not address whether the district court’s declaratory judgment constitutes a judgment to which pre- or post-judgment interest can attach.

12 USCA4 Appeal: 23-1733 Doc: 46 Filed: 08/08/2025 Pg: 13 of 14

omitted). The burden is on the party that failed to preserve the argument. Tarashuk v.

Givens, 53 F.4th 154, 167 (4th Cir. 2022). If an appellant makes no effort to address the

“fundamental error” standard, it fails to meet its burden and the court will not entertain the

argument. Id. Harford did not address the “fundamental error” standard. Thus, we cannot

consider its argument about Sections 1 and 5 of the Litigation Agreement.

Finally, we reject the sole argument that Harford properly preserved. In arguing that

it owes no interest under the Excess Policy, Harford points to a term in the Litigation

Agreement stating that “in no event shall the Harford Insurers be obligated to tender more

than . . . $2,000,000 under the [Excess Policy].” J.A. 209. A different provision in the

Litigation Agreement, however, clarifies that “[Harford] specifically agree[s] that this

[Litigation Agreement] . . . in no way relieve[s] [Harford] of any obligation to pay money

under the policies, in the event that the Court determines that the policy or policies provide

coverage.” J.A. 209 (emphasis added). The Excess Policy itself, which the Litigation

Agreement does not modify, plainly states that it indemnifies the insured for: “pre-

judgment interest awarded against the [i]nsured on that part of any judgment covered under

this policy,” and “all interest earned on that part of any judgment . . . after entry of the

judgment and before we have indemnified the insured, offered to indemnify, or deposited

in court” the monies for the judgment. J.A. 148 (emphasis added). Further, the Excess

Policy expressly states that interest payments under these provisions “will not reduce” the

$2 million liability limit. J.A. 148. In light of these provisions, we conclude that the

Litigation Agreement does not preclude the payment of interest. We therefore affirm the

district court’s award of pre- and post-judgment interest.

13 USCA4 Appeal: 23-1733 Doc: 46 Filed: 08/08/2025 Pg: 14 of 14

IV. Conclusion

For the reasons set forth above, we affirm the district court’s rulings that the Excess

Policy covered the accident and that Harford owed interest to Chambers.

AFFIRMED