Lunsford v. Mills
747 S.E.2d 390
N.C. Ct. App.2013Background
- This appeal challenges a trial court summary judgment grant in a dispute over Farm Bureau’s UIM coverage for injuries from two motor vehicle accidents on I-40 in McDowell County (Sept 18, 2009).
- Mills, driving a tractor-trailer, was employed by Crowder; Buchanan, driving another vehicle, was insured by Allstate; Mills/Crowder were insured by US Fire.
- Plaintiff, a Crooked Creek Fire Department volunteer, sustained severe injuries while assisting Mills after the first accident; he was subsequently hit by Buchanan’s vehicle.
- Plaintiff held two Farm Bureau UIM policies: $300,000 (business auto) and $100,000 (personal auto).
- Allstate tendered $50,000 to Buchanan’s policy; Farm Bureau delayed UIM payment, later settlements with Mills/Crowder totaled $850,000, and the overall plaintiff recovery reached $900,000.
- Plaintiff moved for summary judgment seeking $350,000 from Farm Bureau; Farm Bureau sought a declaration that UIM coverage was exhausted by settlements totaling $400,000.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| When is UIM triggered with multiple tortfeasors? | Lunsford: exhaustion of one policy suffices for UIM trigger. | Farm Bureau: must exhaust all policies before UIM applies. | UIM triggers after exhaustion of all policies on a single underinsured vehicle. |
| Does exhaustion of Buchanan’s liability policy trigger Farm Bureau UIM? | Exhausting one policy suffices and allows UIM recovery of the excess over settlement. | UIM should wait until all liable policies are exhausted. | UIM triggered when all policies applicable to the underinsured vehicle are exhausted. |
| Can Farm Bureau offset/recoup from settlements with other tortfeasors? | Farm Bureau could recoup via subrogation after exhausting one policy. | Offset remains until after UIM exhaustion; misalignment could harm insured. | Court allowed UIM recovery with offset later via subrogation; windfall avoided by ruling. |
| Was plaintiff entitled to the amount sought given total settlements? | Plaintiff’s UIM coverage exceeded settlements with Buchanan, Mills, and Crowder. | Aggregated settlements exceed UIM limits; no extra recovery beyond policy limits. | Plaintiff entitled to $350,000 (aggregate UIM limits minus Buchanan settlement). |
| Are costs and pre/post-judgment interest proper against Farm Bureau? | Costs/interest follow law; Farm Bureau must pay. | Interest/costs concerns governed by policy limits and case law. | Costs and interest awarded consistent with applicable law. |
Key Cases Cited
- Farm Bureau Ins. Co. of N.C., Inc. v. Blong, 159 N.C. App. 365 (2003) (UIM exhaustion and offset framework; insurer must provide coverage first)
- Sanders v. Am. Spirit Ins. Co., 135 N.C. App. 178 (1999) (remedial nature of the Act; maximize protection for the innocent victim)
- Vasseur v. St. Paul Mut. Ins. Co., 123 N.C. App. 418 (1996) (exhaustion definition under N.C. Gen. Stat. § 20-279.21(b)(4))
- Proctor v. N.C. Farm Bureau Mut. Ins. Co., 324 N.C. 221 (1989) (mutual intent to protect insureds under the Act)
- Gen. Acc. Ins. Co. v. Wheeler, 221 Conn. 206 (1992) (insurer may pursue subrogation after exhaust; reception of multiple tortfeasors)