Cinoman v. University of North Carolina
234 N.C. App. 481
| N.C. Ct. App. | 2014Background
- Dr. Michael Cinoman, a temporary attending physician at UNC-PICU in Feb. 1999, was sued in a medical-malpractice action arising from that care.
- Cinoman is insured by Medical Mutual Insurance Company of North Carolina (MMIC); UNC maintains the University of North Carolina Liability Insurance Trust Fund (UNC-LITF) covering UNC employees/agents.
- MMIC believes it covers Cinoman; UNC defendants dispute that Cinoman was an UNC employee/agent entitled to UNC-LITF coverage and contend the UNC-LITF (allegedly excess/self-insurance) would not cover unless other limits exhausted.
- Plaintiffs filed a declaratory judgment action (2009) seeking a declaration whether UNC-LITF also covers Cinoman and the relative liabilities of MMIC and UNC-LITF; summary judgment was denied on appeal and remanded for trial.
- While the underlying malpractice action remained pending, UNC defendants moved to stay the declaratory action, arguing there was no justiciable controversy on UNC-LITF’s duty to indemnify until the malpractice case resolved; the trial court granted the stay.
- Plaintiffs appealed; the Court of Appeals reviewed whether the stay was an abuse of discretion and whether an actual controversy existed as to UNC-LITF’s duty to indemnify.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court’s interlocutory stay is immediately appealable | Appeal is proper because stay affects substantial rights (duty to defend/indemnify dispute) | Dismiss as interlocutory | Appealable under N.C.G.S. §§ 1-277 and 7A-27 (affects substantial right) |
| Whether trial court abused discretion by staying declaratory action pending malpractice resolution | There is an actual controversy as to UNC-LITF’s duty to indemnify because UNC-LITF’s "other insurance" clause makes it primary or concurrently primary | No actual controversy as to indemnity until underlying liability is adjudicated; UNC-LITF is like excess/self-insurance | Trial court abused discretion; stay reversed — actual controversy exists on duty to indemnify |
| Whether UNC-LITF is self-insurance that cannot be primary | Plaintiffs: UNC-LITF’s Memorandum contains a pro rata "other insurance" clause making it primary or concurrently primary | UNC-defendants first argued on rehearing that UNC-LITF is self-insurance (relying on Cone Mills) and thus not primary | UNC-LITF is a self-insurance program but its contract language carves out the Cone Mills rule; its pro rata clause makes it primary/concurrent coverage |
| Effect of competing "other insurance" clauses (pro rata vs excess) on justiciability | If UNC-LITF is primary (pro rata), an actual controversy exists now about allocation and indemnity | If UNC-LITF is excess, indemnity controversy depends on exhaustion and may be premature | Because UNC-LITF’s clause is pro rata, it affords primary or concurrent coverage regardless of MMIC’s clause; justiciable now |
Key Cases Cited
- Watters v. Parrish, 252 N.C. 787 (trial court’s decision to stay one lawsuit to await another reviewed for abuse of discretion)
- Lambe Realty Inv., Inc. v. Allstate Ins. Co., 137 N.C. App. 1 (an insurer’s duty-to-defend interlocutory orders affect substantial rights and are immediately appealable)
- Lawyers Mut. Liab. Ins. Co. v. Nexsen Pruet Jacobs & Pollard, 112 N.C. App. 353 (stay of declaratory action to permit parallel action reviewed for abuse of discretion)
- Home Indem. Co. v. Hoechst-Celanese Corp., 99 N.C. App. 322 (stay pending disposition of similar action is within trial court’s discretion)
- Newton v. Ohio Cas. Ins. Co., 91 N.C. App. 421 (actual controversy is a jurisdictional prerequisite for declaratory judgment)
- Gov’t Emps. Ins. Co. v. New S. Ins. Co., 119 N.C. App. 700 (dispute over which insurer provides primary coverage creates an actual controversy)
- N.C. Farm Bureau Mut. Ins. Co. v. Warren, 89 N.C. App. 148 (no justiciable indemnity dispute while underlying liability unresolved where policy is excess)
- Hlasnick v. Federated Mut. Ins. Co., 136 N.C. App. 320 (analyzing "other insurance" clauses to determine primary vs. excess coverage)
- Horace Mann Ins. Co. v. Cont’l Cas. Co., 54 N.C. App. 551 (definition and effect of excess clauses)
- Fid. & Cas. Co. of N.Y. v. N.C. Farm Bureau Mut. Ins. Co., 16 N.C. App. 194 (distinguishing pro rata clauses from excess clauses; pro rata provides primary coverage)
- Cone Mills Corp. v. Allstate Ins. Co., 114 N.C. App. 684 (self-insurance generally not "other insurance," but exception exists when self-insurance contract states it is primary)