251 N.C. App. 429
N.C. Ct. App.2016Background
- Farm Bureau issued a business auto policy with a $100,000 combined uninsured/underinsured motorist (UM/UIM) limit covering Hull (insured) and listing Crook as a driver.
- Hull and Crook were injured when Branham crossed the center line and crashed into their vehicle; Robinson later also struck their vehicle. Branham's carrier (GMAC) tendered its liability limits; Hull and Crook received a combined $26,547.52 from that tender.
- Farm Bureau offered to pay the $100,000 UIM limit less the GMAC recoveries ($73,452.48), conditioned on execution of a Release and Trust Agreement preserving Farm Bureau's subrogation rights. Defendants struck through the subrogation paragraph, initialed the change, returned the altered release, and negotiated the check.
- Later Hull and Crook recovered additional sums from Robinson ($75,000 to Hull; $140,000 to Crook). Farm Bureau asserted subrogation rights against those recoveries and sued for declaratory relief and damages on May 1, 2015.
- The trial court granted Defendants' Rule 12(b)(6) motion dismissing Farm Bureau's complaint as time-barred. The Court of Appeals affirmed, holding Farm Bureau's claim accrued on March 14, 2012, when Defendants repudiated subrogation, and the three-year limitations period expired before suit.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Farm Bureau's subrogation/contract claim is time-barred | Farm Bureau: breach (and accrual) occurred when Defendants settled with Robinson and refused to pay subrogation, so claim filed within limitations | Defendants: breach occurred March 14, 2012 when they struck subrogation clause and refused to return funds; statute ran before suit | Court: accrual occurred on March 14, 2012 (anticipatory repudiation); claim time-barred; dismissal affirmed |
| Whether Defendants' alteration of the release constituted anticipatory breach that starts limitations | Farm Bureau: even if alteration occurred earlier, actual damages (and thus accrual) did not happen until later Robinson recovery | Defendants: alteration was unequivocal repudiation and notice of breach; limitations tolled from that date | Court: alteration + written refusal to return funds constituted anticipatory breach; limitations commenced then |
| Whether Farm Bureau preserved subrogation rights under policy/Endorsement and statute (and whether failure to advance waives rights) | Farm Bureau: it reserved subrogation rights in its tender; Endorsement and statute permit subrogation against other tortfeasors; failure to advance applies only to settlements with the underinsured tortfeasor | Defendants: Farm Bureau's failure to advance within 30 days waived subrogation per statute and case law | Court: did not reach merits because of statute-bar ruling (majority); concurrence/dissent argued remaining declaratory claims were timely and should be decided on merits |
| Whether Farm Bureau's declaratory-judgment/subrogation claims accrued only after recovery from Robinson | Farm Bureau: declaratory claim could not accrue until actual third-party recovery and denial of subrogation | Defendants: accrual occurred earlier via repudiation | Court: majority treated repudiation date as accrual and dismissed; dissent argued declaratory claim accrued only after Robinson recovery, so would be timely |
Key Cases Cited
- Podrebarac v. Horack, Talley, Pharr, & Lowndes, P.A., 231 N.C. App. 70 (standard for Rule 12(b)(6) review)
- Henlajon, Inc. v. Branch Highways, Inc., 149 N.C. App. 329 (three-year contract statute and accrual at notice of breach)
- Phoenix Ltd. P'ship of Raleigh v. Simpson, 201 N.C. App. 493 (anticipatory breach/repudiation doctrine)
- Lipe v. Citizens Bank & Trust Co., 207 N.C. 794 (breach accrues at default or anticipatory breach)
- Lunsford v. Mills, 367 N.C. 618 (UIM payment/exhaustion and insurer subrogation/advance discussion)
- Farm Bureau Ins. Co. of N.C., Inc. v. Blong, 159 N.C. App. 365 (insurer subrogation rights under UM/UIM provisions against legally responsible third parties)
- Stark ex rel. Jacobsen v. Ford Motor Co., 365 N.C. 468 (court need not address other issues once case resolved on statute of limitations)