Plum Props., LLC v. N.C. Farm Bureau Mut. Ins. Co.
254 N.C. App. 741
| N.C. Ct. App. | 2017Background
- Plum Properties sued insured minors (M. Selak, J. Tucker) and their parents for vandalism of rental properties causing ~$58,000 in damage; parents were insureds under Farm Bureau homeowners policies.
- Parents’ policies provided personal liability for damages caused by an "occurrence," defined as an "accident," but contained an exclusion for property damage that "is intended or may be reasonably expected to result from the intentional acts... of one or more 'insured' persons."
- Plaintiff filed a declaratory judgment action seeking a declaration that the damages were covered under the parents’ policies; Farm Bureau moved for summary judgment.
- The trial court granted summary judgment for the insurer, concluding the minors’ alleged intentional vandalism was not an "occurrence" and was excluded under the intentional-acts exclusion.
- Plaintiff appealed, arguing genuine issues of material fact and alleged policy ambiguity regarding what qualifies as an "occurrence."
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the minors’ acts qualify as an "occurrence" (an "accident") under the policies | The policies are ambiguous as to what constitutes an "occurrence," creating factual issues whether vandalism could be accidental | The minors’ intentional vandalism was not accidental and thus not an "occurrence" as a matter of law | Court held the acts were intentionally caused and not an "occurrence"; no coverage |
| Whether parent-insureds’ negligence/ negligent supervision makes damages accidental for purposes of coverage | Parent insureds did not intend the vandalism, so their alleged negligence could make the harm an "occurrence" | The policies do not provide coverage for intentional acts of insureds simply because another insured (parent) did not intend the harm | Court held attenuation (parent negligence) does not convert intentional acts by insured children into an "occurrence" |
| Applicability of the policy’s intentional-acts exclusion (Section II(E)) | Plaintiff argued coverage should apply despite exclusion ambiguity and factual disputes | Insurer argued exclusion clearly bars coverage for damage intended or reasonably expected from insureds’ intentional acts | Court held exclusion unambiguous and barred coverage for the minors’ intentional, malicious acts |
| Whether summary judgment was improper due to disputed facts about policy interpretation | Plaintiff relied on insurer witness testimony to show "shades of gray" in claim handling and ambiguity | Insurer maintained policy language and complaint facts are undisputed and decide the coverage question as a matter of law | Court held no genuine issue of material fact; summary judgment appropriate and affirmed |
Key Cases Cited
- Harleysville Mut. Ins. Co. v. Buzz Off Insect Shield, L.L.C., 364 N.C. 1 (2010) (establishes the side-by-side comparison test for duty to defend and interprets "occurrence" as inquiring whether alleged facts are covered)
- Waste Mgmt. of Carolinas, Inc. v. Peerless Ins. Co., 315 N.C. 688 (1986) (an "occurrence" requires events not expected or intended from the insured's viewpoint)
- State Capital Ins. Co. v. Nationwide Mut. Ins. Co., 318 N.C. 534 (1986) (coverage clauses liberally construed; exclusions construed narrowly)
- N.C. Farm Bureau Mut. Ins. Co. v. Mizell, 138 N.C. App. 530 (2000) (clear policy language is enforced as written; nontechnical words get ordinary meaning)
- American Mfrs. Mut. Ins. Co. v. Morgan, 147 N.C. App. 438 (2001) (intentional acts reasonably certain to result in injury do not qualify as an "accident")