210 N.C. App. 398
N.C. Ct. App.2011Background
- Unitrin issued an auto insurance policy to David Bain covering 9/11/2005–3/11/2006, including Michael Bain as an insured; policy obligated defense costs and damages in covered claims.
- Michael Bain, driving the insured GMC van with David Bain’s consent, caused an accident with a Bellow/Koury dump truck and filed a personal injury suit against Bellow and Koury.
- A counterclaim for property damage was asserted by Bellow and Koury; Unitrin retained defense counsel to handle the counterclaim under the policy duty to defend.
- Michael Bain privately retained Dr. Barrett as an engineering expert before suit; Dr. Barrett testified in the underlying action and incurred $20,966.28 in fees.
- Unitrin’s defense counsel, Brotherton, stated he would not have hired or relied on Dr. Barrett for the counterclaim defense and did not consult about Barrett’s involvement, and no trial testimony was elicited by Brotherton from Barrett.
- The trial court granted summary judgment for Unitrin, holding Barrett’s fees were not defense costs; plaintiffs appeal seeking recovery of Barrett’s expenses as defense costs under Unit rin’s duty to defend.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Barrett’s expenses are defense costs. | Bain argues Barrett’s services were defense-related costs. | Unitrin contends Barrett’s testimony was not needed for the counterclaim defense and counsel did not rely on Barrett. | No; Barrett’s fees were not proven to be defense costs. |
| Whether equitable estoppel bars Unit rin from denying Barrett as a defense cost. | Equitable estoppel applies due to conduct implying Barrett would be paid. | No reliance shown; conduct did not lull plaintiffs or induce reliance. | Insufficient evidence of equitable estoppel. |
| Whether unjust enrichment can support a claim given a contract governs the relationship. | Plaintiffs seek unjust enrichment for Barrett’s services. | A contract governs payment; unjust enrichment not applicable. | Unjust enrichment claim rejected; contract governs. |
Key Cases Cited
- Duke Univ. v. St. Paul Mercury Ins. Co., 95 N.C.App. 663 (1989) (insurer not liable for prosecuting insured’s counterclaims; defense of covered claims only)
- Sproles v. Greene, 329 N.C. 603 (1991) (defense costs include attorney fees and court costs; definition of defense costs)
- Gore v. Myrtle/Mueller, 362 N.C. 27 (2007) (estoppel requires conduct causing reliance and detriment)
- Booe v. Shadrick, 322 N.C. 567 (1988) (unjust enrichment requires absence of contract; contract governs here)
- Atl. & E. Carolina Ry. Co. v. Wheatley Oil Co., 163 N.C.App. 748 (2004) (unjust enrichment not available where contract governs)