Lead Opinion
Plaintiff sued defendants for actual and consequential damages arising from the disappearance of plaintiff s aircraft while in defendants’ possession pursuant to an alleged charter/lease and service agreement. Plaintiff alleged defendants’ negligence and breach of contract caused $1,250,000 in damages, which sum represented the aircraft’s alleged fair market value of $850,000 as well as business expenses and lost profits arising from the aircraft’s loss. Defendants denied these claims and counterclaimed for allegedly unpaid fees for service and maintenance of the aircraft.
After discovery, defendants moved for summary judgment on all plaintiffs claims. Based upon plaintiffs execution of a subrogation receipt after payment of its insurance claim by Insurance Company of the State of Pennsylvania (hereinafter called “In
The “Proof of Loss/Subrogation Receipt” provided:
Received from [Insurer] the sum of $600,900 . . . being full settlement of all claims and demands for loss and damage occurring on [the date the aircraft disappeared] to the [aircraft] . . . and in consideration of such payment [plaintiff] hereby assigns and transfers to [Insurer] each and all claims and demands against any other person, or corporation, arising from or connected with such loss and damage (and [Insurer] is hereby subrogated in the place of and to the claims and demands of [plaintiff] against said person or corporation in the premises), to the extent of the amount above named, and [Insurer] is hereby authorized and empowered to sue, compromise or settle in [its] name or otherwise to the extent of the money paid as aforesaid above.
The Amendatory Endorsement provided that Insurer waived “its right of subrogation against [defendants] as respects loss or damage under Physical Damage Coverage as set forth under this policy; provided, however, that this waiver shall not prejudice the [Insurer’s] right of recourse for damages arising from the manufacturer, repair, sale or servicing of the aircraft by [defendants].” (Emphasis added.)
Plaintiff contended that the subrogation receipt was a partial assignment which only assigned those claims arising from losses insured under plaintiff’s insurance policy. Since plaintiff claimed losses exceeding the policy’s coverage of mere physical damage, plaintiff contended it did not assign to Insurer its claims for business expenses and lost profits. Plaintiff also moved for a continuance in order to join Insurer if the trial court found it was not
These facts specifically present the following issues: (I) Since the court’s summary judgment did not determine defendants’ counterclaim, whether the partial summary judgment affects plaintiff’s “substantial right” under N.C.G.S. Sec. l-277(a) (1983) and N.C.G.S. Sec. 7A-27(d)(l) (1986); and (II) where plaintiff assigned its claims to Insurer “to the extent of” its insurance reimbursement, (A) whether plaintiff’s assignment was a partial assignment of plaintiff’s interest in all its claims; if so, (B) whether the common law rule against “claim-splitting” would invalidate such a partial assignment; and (C) whether factual disputes over the extent of plaintiff’s entire loss precluded the trial court’s summary determination that plaintiffs assignment divested it of “real party in interest” status under N.C.G.S. Sec. 1A-1, Rule 17(a) (1983) and N.C.G.S. Sec. 1-57 (1983).
I
In general, only final orders and judgments may be appealed. Our Supreme Court distinguished final and interlocutory judgments in Veazey v. City of Durham,
A final judgment is one which disposes of the cause as to all the parties, leaving nothing to be judicially determined between them in the trial court .... An interlocutory order is one made during the pendency of an action, which does not dispose of the case, but leaves it for further action by the trial court in order to settle and determine the entire controversy.
As the trial court’s summary judgment did not adjudicate defendants’ counterclaims, we note the court failed to determine there was no just reason for delay of the appeal under N.C.G.S. Sec. 1A-1, Rule 54(b) (1983). The court’s partial summary judgment is therefore interlocutory, see N.C.G.S. Sec. 1A-1, Rule 56(c) (1983), and not otherwise appealable “except as expressly provided by these rules or other statutes.” Rule 54(b). Section 7A-27(d) authorizes an appeal of right
*5 from any interlocutory order or judgment of a superior court or district court in a civil action or proceeding which (1) Affects a substantial right, or (2) In effect determines the action and prevents a judgment from which appeal might be taken, or (3) Discontinues the action, or (4) Grants or refuses a new trial.
Compare Sec. 7A-27(d) with Sec. 1-277(a) (allowing appeal of any order or determination meeting identical four criteria of Section 7A-27(d)); see Survey of Developments in North Carolina Law, 1978 — Civil Procedure, 57 N.C.L. Rev. 827, 907 n. 101 (1979) (noting both statutes allow interlocutory appeals on grounds other than “substantial right” exception); but see Waters v. Qualified Personnel, Inc.,
With respect to those interlocutory orders which allegedly do affect a substantial right, our Supreme Court has additionally long required that the interlocutory “ruling or order deprive . . . the appellant of a substantial right which he would lose if the ruling or order is not reviewed before final judgment. ” Waters,
There has thus evolved a two-part test of the appealability of interlocutory orders under the “substantial right” exception provided in Section 1-277(a) and Section 7A-27(d)(l). First, the right itself must be “substantial.” E.g., Green v. Duke Power Co.,
Justice Exum stated in Waters that, “Admittedly, the ‘substantial right’ test ... is more easily stated than applied.”
More important, some decisions have completely omitted the requirement that the right be lost or prejudiced if not immediately appealed. This omission has produced two occasionally incompatible lines of authority governing the appealability of partial summary judgments. Compare Green,
While the Oestreicher Court clearly omitted the requirement that the substantial right be lost or prejudiced, it is true that the
Thus, after Green, simply having all claims determined in one proceeding is not a substantial right. A party has instead the substantial right to avoid two separate trials of the same “issues”: conversely, avoiding separate trials of different issues is not a substantial right. See Porter v. Matthews Enterprises, Inc.,
However, before and even after Green, some decisions other than Oestreicher either followed its example of a substantial right or otherwise omitted the requirement that the substantial right be lost or irreparably prejudiced. E.g., Nasco Equip. Co. v. Mason,
We note the Nasco Court also apparently merged two separate grounds for appealing interlocutory orders: the Court characterized a summary judgment as an order which denied plaintiff a jury trial and “in effect, determine[d] the claim [and] thus affect[ed] a substantial right . . . under General Statutes 1-277 and 7A-27.” Nasco,
This apparent doctrinal inconsistency concerning the requirements for appealing interlocutory orders may produce irreconcilable results in cases which, like the instant case, include counterclaims. Specifically, where summary judgment is entered against plaintiff in a case where defendant’s counterclaims turns on jury issues different from those raised by plaintiffs claim, the Oestreicher/Nasco and Green/Bemick lines of authority produce opposite results. Under the Oestreicher/Nasco line, a partial summary judgment in such a case is appealable since simply denying plaintiff a trial of its claim “affects” the substantial right to have all claims tried in one action. However, irrespective of any effect on this purported substantial right, such a partial summary judgment is not appealable under Green and Bernick since there is ordinarily no possibility of inconsistent verdicts or other lasting prejudice where trial of defendant’s counterclaim before appeal will not determine any issues controlling the potential trial of plaintiffs claims after appeal.
While we value the case-by-case flexibility afforded us by the substantial right test, appellate application of this statutory test need not be so uncertain or inconsistent that premature or fragmentary appeals are needlessly encouraged. Cf. Comment, Interlocutory Appeals in North Carolina: The Substantial Right Doctrine, 18 Wake Forest L. Rev. 857, 876-78 (1982) (reviewing drawbacks of doctrine). As we question the compatibility of the Oestreicher/Nasco analysis with Veazey, Green and Bemick, we adopt the latter decisions’ longer established, and more recently affirmed, rationale and conclude that the possibility of an inconsistent verdict in defendants’ counterclaim trial could irreparably prejudice any subsequent trial of plaintiffs negligence and contract claims. We therefore hold that the trial court’s summary judgment dismissing plaintiffs claims affected a substantial right such that it is immediately appealable under Section 7A-27(d)(1) and Section l-277(a).
II
After plaintiffs airplane disappeared, plaintiff executed the disputed form “Subrogation Receipt” in favor of Insurer. Defendants contend the subrogation receipt evidences an absolute assignment to Insurer of all plaintiffs claims such that Insurer is the only real party in interest to this action under Rule 17(a) and Section 1-57. Plaintiff contends the document is ambiguous but, at most, simply reflects a partial assignment to Insurer of the property loss claim compensated by Insurer’s $600,900 payment. Plaintiff asserts it retained a legal interest in its negligence and
Plaintiffs negligence and contract claims all arise from the disappearance or theft of plaintiffs aircraft. Neither party disputes that tort and contract claims arising from property damage or loss may be assigned in toto. See Rolling Fashion Mart, Inc. v. Mainor,
Insurance policies must be given a reasonable interpretation consonant with their apparent object and plain intent; accordingly, sentence structure and punctuation may be carefully analyzed to confirm the meaning of the document’s language. See Huffman v. Occidental Life Ins. Co. of Raleigh,
A
At the outset, we reject plaintiffs contention that it assigned to Insurer only its interests in the physical damage claim covered by its insurance policy. The subrogation receipt specifically assigns “all claims arising from” the aircraft’s loss “to the extent of’ $600,900. The partial nature of this assignment, if any, must result from this “extent” to which all plaintiffs claims were assigned to Insurer.
The language of the subrogation receipt specifically “assigns” plaintiffs claims to the same “extent” the Insurer is “subrogated” to those claims, ie., to the extent of Insurer’s $600,900 payment. The law of subrogation therefore sheds considerable light on the extent to which the claims have been assigned. Subrogation is an equitable remedy in which one steps into the place of another and takes over the right to claim monetary damages to the extent that the other could have, while an assignment is the formal transfer of property or property rights. Payne v. Buffalo Reirir surance Co.,
Where the insurer’s payments compensate the insured’s entire loss (including all losses not covered by or compensated under the insurance policy), our courts have long held the insurer is subrogated to the insured’s entire cause of action. E.g., Hardware Dealers Mutual Fire Ins. Co. v. Sheek,
While the doctrine of subrogation vests an equitable right to reimbursement in the insurer, the insured’s assignment of legal title to its claims instead transfers a separable legal interest in the claim’s subject matter. See Payne,
In the instant case, Insurer could have acquired by assignment a legal interest in the subject matter of plaintiffs claims to an extent gréater than its $600,900 equitable subrogation interest in plaintiff’s recovery; indeed, Insurer could have acquired absolute title to plaintiffs entire $1,250,000 claim irrespective of the extent to which Insurer was subrogated to plaintiffs claims. See generally 16 G. Couch, Couch on Insurance 2d par. 61:109-113 (1983). However, this subrogation receipt specifically manifests Insurer’s contrary choice to acquire a legal interest in plaintiffs claims only “to the extent” it was entitled to subrogation to those claims, ie., only to the extent its $600,900 insurance payment compensated plaintiffs entire loss.
Thus, we conclude plaintiff assigned to Insurer a legal interest in the subject matter of all plaintiffs claims to the extent the Insurer’s $600,900 payment compensated plaintiffs losses arising from the disappearance of its aircraft. If plaintiffs losses exceeded $600,900, then only a partial assignment had occurred. Cf. Squires v. Sorahan,
B
We reject defendants’ contention that allowing a partial assignment of the instant plaintiffs claims would contravene the Rolling Fashion Mart holding. In that case, the plaintiff-insured’s own pleadings revealed the insurer’s payments actually exceeded the plaintiffs allowable losses.
However, in holding the plaintiff could not recover its deductible payment, the Rolling Fashion Mart court also stated:
Plaintiff argues . . . that it is entitled to recover at least its $100 deductible. We disagree. The property damage claim is a single indivisible claim, and cannot be partially assigned. Plaintiff assigned its entire claim for damage to its vehicle; that claim has been resolved by arbitration and award. To hold otherwise would subject defendant to multiple actions for the same wrong and would sanction the splitting of an indivisible claim for relief.
In assignment cases such as the instant case, title to the action is similarly determined by substantive principles of assignment rather than by the procedural rule against “claim-splitting.” Our courts have never held the rule against claim-splitting itself controls the substantive determination of a party’s legal interest in a cause of action: the rule merely requires that “all damages incurred by the insured as a result of a single injury must be recovered in a single action.” Smith v. Pate,
While the Rolling Fashion Mart result is correct, the court’s statement that property damage claims may not be partially assigned results from a misapplication of the rule against “claim-splitting.” The rule is for the tort-feasor’s benefit and simply ensures that he “cannot be compelled against his will to defend two actions for the same injury.” Burgess,
In the instant case, the “claim-splitting” rule merely gives defendants the choice to settle the entire controversy in one action by joining Insurer. See Booker,
C
If plaintiff has retained any separable legal interest in the subject matter of its claims, then both plaintiff and Insurer are real parties in interest under Rule 17(a). See Booker,
As to plaintiffs real party in interest status in this action, we must therefore conclude the trial court could not enter summary judgment against plaintiff based on Rule 17(a) since plaintiffs status as a partial assignor and real party in interest cannot be determined until the factual issue of the extent of plaintiff’s entire loss is determined. Cf. Jewell,
However, we are required to take notice of another potential basis for dismissal after remand. While the real party in interest provisions of Rule 17 are for the parties’ benefit and may be waived if no objection is raised, the necessary joinder rules of
Whether or not Insurer’s legal title to plaintiffs claims is partial or complete, Insurer clearly acquired some enforceable legal interest in the subject matter of this action by virtue of the assignment provided by the subrogation receipt. See American Surety Co.,
Ill
Plaintiffs status as partial assignor and a real party in interest turns on the disputed factual extent of plaintiffs entire loss, which includes those losses neither covered by nor compensated under plaintiffs insurance contract with Insurer. Therefore, we reverse the trial court's summary judgment dismissing plaintiffs claims for lack of a real party in interest and remand the case for further proceedings not inconsistent with this opinion.
Reversed and remanded.
Concurrence Opinion
concurring in the result.
Though I agree that the order is both appealable and erroneous, in my judgment most of what is said in the opinion is unnecessary and some of it is incorrect. In my view the issues discussed are free of difficulty, each can be adequately and correctly treated in a paragraph or two, and neither party nor our jurisprudence would have suffered if nothing had been said about appealability since that issue was not raised by either of the briefs and the order was clearly appealable, in any event. Be that as it may, my opinion is that: (1) The order, though interlocutory, was immediately appealable whether the trial judge so declared or not because plaintiff’s right to try its claim for defendants’ negligence in caring for its airplane before the same jury that tries defendants’ counterclaim for expenses incurred in caring for the plane is a substantial one, G.S. 1-277, for it would be a travesty if the claims were tried before different juries and one found that the parties agreed to one thing and the other found that they agreed to something else; and (2) the order was erroneous and no