NORTH CAROLINA FARM BUREAU MUTUAL INSURANCE COMPANY, INC. v. JUDY LUNSFORD
No. 242A20-1
IN THE SUPREME COURT OF NORTH CAROLINA
Filed 13 August 2021
2021-NCSC-83
EARLS, Justice.
Aрpeal from the opinion of a divided Court of Appeals panel, 271 N.C. App. 234 (2020), affirming entry of Order and Declaratory Judgment in favor of the plaintiff on 3 February 2019 by Judge Michael D. Duncan in Superior Court, Guilford County. Heard in the North Carolina Supreme Court on 17 May 2021.
William F. Lipscomb for the Plaintiff-Appellee.
Burton Law Firm, PLLC, by Jason M. Burton, for the Defendant-Appellant.
Jon. R. Moore and C. Douglas Maynard, Jr., for North Carolina Advocates for Justice, amicus curiae.
Bailey & Dixon, LLP, by J.T. Crook, for North Carolina Association of Defense Attorneys, amicus curiae
OPINION
¶ 1 Cars and people are, naturally, mobile. They regularly traverse state lines. Unfortunately, but inevitably, cars and people also get into accidents. When they do, it can raise issues regarding which state‘s law governs the interpretation of various provisions of each of the involved parties’ insurance contracts. In this case, we must determine whether a North Carolina resident is entitled to collect underinsured motor vehicle coverage benefits from her North Carolina insurer, after she was injured while traveling in Alabama in a car owned and operated by a Tennessee resident and insured by a Tennessee insurer. To answer that question, we must decide if North Carolina or Tennessee law applies when ascertaining whether the Tennessee vehicle is “underinsured” within the meaning of a contract executed in North Carolina between a North Carolina resident and a North Carolina insurer.
¶ 2 Judy Lunsford, a North Carolina resident, was a passenger in her sister Levonda Chapman‘s vehicle when a serious accident occurred as they were travelling through Alabama. Chapman negligently drove her vehicle across a highway median into oncoming traffic, where it collided with an 18-wheeler. As a result of the accident, Lunsford was
¶ 3 Chapman was insured by a Nationwide Insurance Company policy purchased in her home state of Tennessee. As a passenger in Chapman‘s vehicle, Lunsford was entitled to recover from Nationwide, under the terms of Chapman‘s bodily injury liability coverage. Nationwide offered—and Lunsford accepted—the full $50,000 available under the policy‘s per person bodily injury coverage limit. Lunsford also claimed she was entitled to coverage under the underinsured motorist (UIM) provision of her own insurance contract executed in North Carolina with a different insurer, North Carolina Farm Bureau Mutual Insurance Company, Inc. (NC Farm Bureau). NC Farm Bureau denied her claim and initiated a declaratory judgment action to establish its liability to Lunsford. The trial court agreed with NC Farm Bureau‘s position, concluding that Chapman‘s vehicle was not an “underinsured highway vehicle” as defined under North Carolina‘s Financial Responsibility Act (FRA). A divided panel of the Court of Appeals affirmed.
¶ 4 In its argument before this Court, NC Farm Bureau concedes that the majority below “employed incorrect reasoning” in reaching its conclusion that Lunsford was not entitled to coverage undеr the UIM provision of her insurance contract. Still, NC Farm Bureau argues the Court of Appeals “reached the correct result” in affirming the trial court‘s entry of declaratory judgment for NC Farm Bureau, contending that Chapman‘s vehicle is not an underinsured motor vehicle as defined by the terms of Chapman‘s Nationwide insurance contract, which incorporates Tennessee law.
¶ 5 However, in determining whether Lunsford is entitled to collect pursuant to the contract she entered into with NC Farm Bureau, we must apply North Carolina law to interpret the terms of a contract executed in North Carolina that necessarily incorporates North Carolina‘s FRA. We need not interpret Chapman‘s Nationwide insurance contract incorporating Tennessee law. Resolving this dispute does not require us to adjudicate any of Chapman‘s or Nationwide‘s rights, nor does it implicate any other state‘s interest in enforcing its own laws regulating the provision and maintenance of motor vehicle insurance.
¶ 6 Applying North Carolina law, we affirm prior decisions of the Court of Appeals allowing interpolicy stacking when calculating the “applicable” policy limits as required under the relevant provision of the FRA,
I. Factual Background
¶ 7 At the time of the crash, both Lunsford and Chapman maintained motor vehicle accident insurance policies. Chapman‘s Nationwide policy provided her and her vehicle with bodily injury liability covеrage subject to limits of $50,000 per person and $100,000 per accident, and UIM coverage subject to the same limits. Lunsford‘s NC Farm Bureau policy provided her with UIM coverage subject to the same limits as Chapman‘s bodily injury liability coverage ($50,000 per person / $100,000 per accident). After the crash, Nationwide offered, and Lunsford accepted, the full $50,000 available under the Nationwide bodily injury liability policy per person limit. Lunsford then sought an additional $50,000 in UIM coverage from her own insurer, NC Farm Bureau.
¶ 8 NC Farm Bureau denied Lunsford‘s claim and initiated a declaratory judgment action in Superior Court, Guilford County seeking a ruling establishing that “the UIM coverage of [the NC Farm Bureau policy] does not apply to [Lunsford‘s] injuries from the . . . motor vehicle collision in question and that [Lunsford] is not entitled to recover any UIM coverage from said policy.” NC Farm Bureau contended that Chapman‘s vehicle was not an “underinsured motor vehicle”
¶ 9 On 19 December 2018, the trial court entered judgment on the pleadings in NC Farm Bureau‘s favor. The trial court reasoned that because the Nationwide insurance contract was executed in Tennessee, “Chapman‘s policy is governed by Tennessee law.” Undеr Tennessee law, an “uninsured1 motor vehicle does not include a motor vehicle . . . [i]nsured under the liability coverage of the same policy of which the uninsured motor vehicle coverage is a part.”
¶ 10 A divided panel of the Court of Appeals affirmed, but on a different rationale than the one utilized by the trial court. The majority agreed with the trial court that Chapman‘s Nationwide UIM policy was not “applicable at the time of an accident under [
¶ 11 Judge Murphy dissented based upon his interpretation of Chapmаn‘s contract with Nationwide. According to Judge Murphy, Chapman‘s Nationwide policy contained a “conformity clause” stating that the insurer would “adjust this policy to comply . . . [w]ith the financial responsibility law of any state or province which requires higher liability limits than those provided by this policy.” Id. at 242–43 (Murphy, J., dissenting). Therefore, Judge Murphy read Chapman‘s Nationwide policy as “explicitly incorporat[ing] our FRA,” requiring the court to apply the definition of an “underinsured motor vehicle” provided by
¶ 12 Judge Murphy also disputed the majority‘s conclusion that Lunsford was not a “person[ ] insured” by Chapman‘s Nationwide policy. He noted that in Sproles, this Court interpreted the relevant provision of the FRA,
essentially establish[ ] two “classes” of “persons insured“: (1) the named insured and, while resident of the same household, the spouse of the named insured and relatives of either and (2) any person who uses with the consent, express or implied, of the named insured, the insured vehicle, and a guest in such vehicle.
Id. at 244. Applying Sproles, Judge Murphy concluded that “Lunsford, as the named insured, is a class one insured with respect to the NCFB policy . . . . She is also a class two insured with respect to Chapman‘s Nationwide policy as a guest in the insured vehicle with consent of the named insured.” Id.
II. Analysis
¶ 13 All insurers doing business in North Carolina are required to offer UIM coverage. See
¶ 14 To determine whether Lunsford is entitled to access the UIM coverage she purchased from NC Farm Bureau, “[t]he threshold question . . . is whether the tort-feasor‘s vehicle is an ‘underinsured highway vehicle’ as the term is used in
the sum of the limits of liability under all bodily injury liability bonds and insurance policies applicable at the time of the accident is less than the applicable limits of underinsured motorist coverage for the vehicle involved in the accident and insured under the owner‘s policy.
¶ 15 Everyone agrees that the only bodily injury liability insurance policy “applicable at the time of the accident” is Lunsford‘s Nationwide policy, and that Lunsford‘s NC Farm Bureau UIM policy is an “applicable” UIM coveragе limit. The crux of the parties’ dispute is whether Chapman‘s Nationwide UIM coverage limit is also an “applicable limit of underinsured motorist coverage for the vehicle involved in the accident and insured under the owner‘s policy.” Lunsford says it is. NC Farm Bureau says it is not.
¶ 16 Because of each policy‘s respective limits, the answer to this question is dispositive in this case. If the Nationwide UIM coverage limit is “applicable,” then—under Court of Appeals precedent which NC Farm Bureau does not challenge—Lunsford is entitled to stack the Nationwide UIM coverage limit ($50,000) with the NC Farm Bureau coverage limit ($50,000). Benton, 195 N.C. App. at 92 (“UIM coverage may be stacked interpolicy to calculate the applicable limits of underinsured motorist coverage for the vehicle involved in the accident for the purpose of determining if the tortfeasor‘s vehicle is an ‘underinsured highway vehicle.’ “). If Lunsford is entitled to stack the Nationwide and NC Farm Bureau
¶ 17 Initially, we reject the distinction the majority below relied upon in arriving at its conclusion that Chapman‘s Nationwide coverage limit was not “applicable” within the meaning of
¶ 18 Rather than defend the Court of Appeals’ reasoning—or ask this Court to overrule Benton and other cases recognizing the propriety of interpolicy stacking—NC Farm Bureau contends that interpolicy stacking is not permitted in this case because Chapman was a Tennessee resident who entered into a cоntract with Nationwide in Tennessee. In NC Farm Bureau‘s view, Chapman‘s Nationwide contract does not incorporate North Carolina‘s FRA, and it need not, because it was executed in Tennessee and North Carolina lacks any substantial connection to Chapman or the accident at issue. By extension, NC Farm Bureau contends that the terms of the Nationwide contract, which incorporate Tennessee‘s definition of an underinsured motor vehicle, supply the definition to be applied in determining whether Chapman‘s vehicle is underinsured. It is uncontroverted that under the relevant Tennessee statute,
¶ 19 To be clear, NC Farm Bureau does not dispute that (1) Lunsford is seeking UIM coverage under her own insurance policy issued by NC Farm Bureau pursuant to a contract entered into in North Carolina, (2) all automobile accident insurance policies executed in North Carolina necessarily incorporate North Carolina‘s FRA, and (3) this Court must apply North Cаrolina law when interpreting an insurance policy issued in North Carolina to a North Carolina insured. What NC Farm Bureau appears to be arguing is that North Carolina law requires us to look to the terms of Chapman‘s Nationwide policy to ascertain whether the UIM coverage limit contained therein is an “applicable limit[ ] of underinsured motorist coverage for the vehicle involved in the accident and insured under the owner‘s policy.”
¶ 20 The essential question in this case is one of statutory interpretation: What did the Gеneral Assembly intend by using the phrase “applicable limits of underinsured
¶ 21 Read in context, the General Assembly‘s choice of the term “applicable” does not unambiguously answer the question of whеther an injured party is or is not permitted to stack the tortfeasor‘s UIM coverage limit under these circumstances. Black‘s Law Dictionary defines applicable as “1. Capable of being applied; fit and right to be applied. 2. (Of a rule, regulation, law, etc.) affecting or relating to a particular person, group, or situation; having direct relevance.” Black‘s Law Dictionary (11th ed. 2019). Citing a similar dictionary definition, NC Farm Bureau argues that “[t]he UIM coverage of Chapman‘s policy is not capable of being applied to Lunsford‘s claim because the policy provisions, and the applicable Tennessee statutes, preclude her vehicle from being an underinsured vehicle for the UIM coverage of her policy.”
¶ 22 But this tautological proposition smuggles into the FRA the very premise NC Farm Bureau seeks to uncover in the statutory text. The provision does not state that “applicable” means “contained in a policy which would by its own terms define the tortfeasor‘s vеhicle as underinsured.” The text contains only the phrase “applicable limits.” The question before this Court is what meaning the General Assembly intended to communicate by including that phrase. NC Farm Bureau offers one possible answer, but that answer cannot be derived from the text alone, and we must not read into a statute “language that simply is not there.” Boseman v. Jarrell, 364 N.C. 537, 554 (2010) (Hudson, J., dissenting); see also Borden v. United States, 141 S.Ct. 1817, 1829 (2021) (“[W]e must construe the [statutory clause] as it is—without first inserting the word[s] that will (presto!) produce the dissent‘s reading.“).
¶ 23 Benton and the other cases construing
¶ 24 Even though Benton interpreted and applied
“judicial notice” that the record in Benton indicates the tortfeasor‘s insurance contract was executed in North Carolina. We decline the invitation to read Benton as turning on a fact which, upon close examination of the decision itself, appears to have been entirely extraneous to the court‘s reasoning and ultimate holding. We are unconvinced by NC Farm Bureau‘s effort to find in Benton a legal rule the court did not propound.
¶ 25 Instead, we understand the General Assembly‘s use of the phrase “applicable limits” to refer to the UIM coverage limits contained within the insurance policy covering the tortfeasor‘s vehicle, in a circumstance such as this one where the tortfeasor is the driver and the injured party is a passenger seeking to access the UIM coverage contained within his or her own policy incorporating North Carolina‘s FRA. This interpretation is consistent with “the spirit of the [FRA] and what the [FRA] seeks to accomplish.” Lenox, 353 N.C. at 664 (cleaned up).
¶ 26 “The avowed purpose of the Financial Responsibility Act, of which
¶ 27 Further, NC Farm Bureau‘s proposed interpretation does not reflect the way UIM coverage functions. UIM coverage becomes available to an insured from his or her own insurer when the damage caused by a tortfeasor exceeds the tortfeasor‘s bodily injury liability coverage limits. The circumstances under which an insured will be able to claim UIM benefits are dictated by the terms and limits of the insured‘s own contract with his or her insurer—and, by extension when the insurance contract is executed in North Carolina, the provisions of the FRA. See, e.g., Lunsford v. Mills, 367 N.C. at 635 (2014) (Newby, J., concurring in part, dissenting in part) (“[A]n insured plaintiff‘s UIM recovery ‘is controlled contractually by the amount of the UIM policy limits purchased and available to her.’ “) (quoting Nikiper v. Motor Club of Am. Cos., 232 N.J. Super. 393, 398–99, certification denied, 117 N.J. 139 (1989)). It follows logically that the availability of UIM coverage to the insured—which hinges upon the threshold determination of whether a vehicle is underinsured—should be dictated by the terms of the bargain struck by the insured and the insurer, not by the terms of the bargain struck by the tortfeasor with his or her insurer. The availability of the UIM coverage Lunsford obtained should not be contingent on the tortfeasor fortuitously residing in a state whose
¶ 28 If it were Chapman seeking to recover UIM benefits from Nationwide after an accident caused by Lunsford‘s tortious driving, then the terms of the Nationwide contract would supply the definition of an “underinsured vehicle.”3 But the very reason an insurance contract includes a UIM coverage provision is to define the circumstances under which another vehicle (the one driven by the tortfeasor) is to be considered underinsured, for the purpose of establishing when the insurer‘s obligation to disburse UIM benefits is triggered. The definition of an underinsured
motor vehicle that a North Carolina insured agrees to with his or her insurer does not incorporate or in any way depend upon the definition that would be operative if it were the tortfeasor who was seeking to recover under his or her own insurance policy.
¶ 29 It is not at all anomalous that a vehicle might be considered “undеrinsured” as that term is defined in a North Carolina contract incorporating the FRA, but not “underinsured” as that term is defined in an out-of-state contract incorporating that state‘s insurance laws. Out of concern for the consequences of leaving North Carolina insureds vulnerable to financial ruin, or even simply being undercompensated, when they are harmed by irresponsible drivers, North Carolina has chosen to mandate that insurers make UIM coverage available in a circumstance where Tennessee has not. To give effect to the public policy considerations motivating the General Assembly‘s legislative choice, and to honor the bargains struck by North Carolinians with their insurers in light of the North Carolina FRA, we must apply the definition of an “underinsured motor vehicle” chosen by the representatives of the people of North Carolina, not the one chosen by the representatives of the people of Tennessee. See Fortune Ins. Co. v. Owens, 351 N.C. 424, 428 (2000) (“[A]n automobile insurance contract should be interpreted and the rights and liabilities of the parties thereto determined in accordance with the laws of the state where the contract was entered.“). Therefore, we hold that the UIM coverage limit contained in Chapman‘s Nationwide policy is an “applicable” limit within the meaning of
III. Conclusion
¶ 30 When a passenger who has previously obtained UIM coverage pursuant to a contract executed in North Carolina is injured while travelling in a vehicle driven by someone else, and the injury results from that driver‘s tortious conduct, the driver‘s UIM coverage limits are “applicable” within the meaning of
REVERSED.
¶ 31 This matter concerns the underinsured motorist bodily injury coverage in the insurance policy between North Carolina Farm Bureau Mutual Insurance Company, Inc. (Farm Bureau) and Judy Lunsford (Lunsford Policy). The material facts are undisputed and the law well-established. However, the majority assumes the role of the legislature in this matter and ignores our well-established principles for the construction of insurance policies and the determination of what law applies to insurance policies. Applying the plain language of the statute enacted by the North Carolina legislature to a policy entered in North Carolina and Tennessee law to a policy entered in Tennessee, consistent with our precedent, clearly leads to affirming the trial court’s granting of judgment on the pleadings in Farm Bureau’s favor. Therefore, I respectfully dissent.1
I. Background
¶ 32 Lunsford, while a resident of North Carolina, applied in North Carolina for and was issued in North Carolina the Lunsford Policy from Farm Bureau. The named insured for the Lunsford Policy was Lunsford, and the Lunsford Policy covered a 2016 Toyota RAV4, which at all relevant times, was titled and registered to Lunsford in North Carolina. The Lunsford Policy provided uninsured and underinsured motorist bodily injury coverage of $50,000 per person/$100,000 per accident.
¶ 33 While a passenger in a 2015 Chevrolet Silverado (Silverado) owned by and being driven by Levonda Chapman, a resident of Tennessee, Lunsford was seriously injured as a result of Chapman’s negligent driving. The accident occurred in Alabama. At the time of the accident, Chapman’s Silverado was covered by an automobile insurance policy between Nationwide Mutual Insurance Company (Nationwide) and Chapman (Chapman Policy), which provided bodily injury liability coverage of $50,000 per person/$100,000 per occurrence and underinsured motorist coverage of $50,000 per person/$100,000 per occurrence. The Chapman Policy was entered into in Tennessee. Nationwide offered the policy limit of the Chapman Policy bodily injury liability coverage, $50,000, to Lunsford.
¶ 34 The dispute between Lunsford and Farm Bureau concerns whether Chapman’s vehicle was an underinsured highway vehicle. As relevant to this appeal, the underinsured motorist coverage under the Lunsford Policy applies when “[Lunsford] is legally entitled to recover from the owner or operator of an underinsured [highway] vehicle because of bodily injury sustained by [her] and caused by the accident.” Recognizing that the definition of underinsured highway vehicle in the Lunsford Policy is narrower than the applicable subsection of the statute,
a highway vehicle with respect to the ownership, maintenance, or use of which, the sum of the limits of liability under all bodily injury liability bonds and insurance policies applicable at the time of the accident is less than the applicable limits of underinsured motorist coverage for the vehicle involved in the accident and insured under the owner’s policy. For purposes of an underinsured motorist claim asserted by a person injured in an accident where more than one person is injured, a highway vehicle will also be an “underinsured highway vehicle” if the total amount actually paid to that person under all bodily injury liability bonds and insurance policies applicable at the time of the accident is less than the applicable limits of underinsured motorist coverage for the vehicle involved in the accident and insured under the owner’s policy. Notwithstanding the immediately preceding sentence, a highway vehicle shall not be an “underinsured motor vehicle” for purposes of an underinsured
motorist claim under an owner’s policy insuring that vehicle unless the owner’s policy insuring that vehicle provides underinsured motorist coverage with limits that are greater than that policy’s bodily injury liability limits.
¶ 35 Farm Bureau also acknowledges that the Court of Appeals has construed the legislature’s use of the plural “limits” in the phrase “less than the applicable limits” to allow interpolicy stacking of applicable policies and does not challenge this holding in this matter. See Benton v. Hanford, 195 N.C. App. 88, 92–93 (2009); N.C. Farm Bureau Mut. Ins. Co. v. Bost, 126 N.C. App. 42, 50–51 (1997). Instead, Farm Bureau contends that the Chapman Policy is not an applicable policy. Specifically, the Chapman Policy excludes from the definition of underinsured highway vehicle2 the Silverado—as both a vehicle insured under the liability сoverage of the Chapman Policy and a vehicle operated by the insured, Chapman. This exclusion is consistent with the statutes enacted by the Tennessee legislature defining an uninsured highway vehicle for purposes of uninsured and underinsured motorist coverage. See
¶ 36 Lunsford does not dispute that the Chapman Policy is an insurance contract entered into in Tennessee by a Tennessee resident or the construction of the Chapman Policy under Tennessee law presented by Farm Bureau. Instead, Lunsford, relying on Benton, appears to contend that the definition of underinsured highway vehicle in the statute enacted by the North Carolina legislature applies to every policy, including the Chapman Policy. Thus, according to Lunsford, we ignore the plain language of the Chapman Policy and Tennessee law. Lunsford also argues Tennessee law does not apply because injury to a North Carolina resident is sufficient to establish a close сonnection with North Carolina and require the application of North Carolina law to the construction of the policy as in Collins & Aikman Corp. v. Hartford Acc. & Indemnity Co., 335 N.C. 91 (1993). Lastly, Lunsford raised in her reply before the Court of Appeals and her brief with this Court that a financial responsibility provision in the Chapman Policy dictates the application of North Carolina law in this matter.
II. Construction of Insurance Policies
¶ 37 “This Court has long recognized its duty to construe and enforce insurance policies as written, without rewriting the contract or disregarding the express language used.” Fid. Bankers Life Ins. Co. v. Dortch, 318 N.C. 378, 380 (1986). “However, when a statute is applicable to the terms of an insurance policy, the provisions of the statute become a part of the policy as if written into it.” Bray v. N.C. Farm Bureau Mut. Ins. Co., 341 N.C. 678, 682 (1995). Thus, the policy is construed in accordance with its written terms unless a binding statute, regulation, or order requires a different construction. Allstate Ins. Co. v. Shelby Mut. Ins. Co., 269 N.C. 341, 345 (1967). When unambiguous, the plain language of the policy controls, N.C. Farm Bureau Mut. Ins. Co. v. Martin, 376 N.C. 280, 286 (2020), or if superseded by a binding statute, the plain language of the statute controls, see generally Fid. Bank v. N.C. Dep’t of Revenue, 370 N.C. 10, 20 (2017).
Where a policy defines a term, that definition is to be used. If no definition is given, non-technical words are to be given their meaning in ordinary speech, unless the context clearly indicates another meaning was intended. The various terms of the policy are to be harmoniously construed, and if possible, every word and every provision is to be given effect.
Woods v. Nationwide Mut. Ins. Co., 295 N.C. 500, 505–06 (1978). This Court regularly looks to non-legal dictionaries to determine plain meaning for policies and statutes. See, e.g., Raleigh Hous. Auth. v. Winston, 376 N.C. 790, 2021-NCSC-16, ¶ 8
¶ 38 When a provision of an insurance policy is ambiguous, the provision will be given the meaning most favorable to the insured. Shelby Mut., 269 N.C. at 346. However, “[t]he terms of another contract between different parties cannot affect the proper construction of the provisions of an insurance policy.” Id. Rather,
[t]he existence of the second contract, whether an insurance policy or otherwise, may or may not be an event which sets in operation or shuts off the liability of the insurancе company under its own policy. Whether it does or does not have such effect, first requires the construction of the policy to determine what event will set in operation or shut off the company’s liability and, second, requires a construction of the other contract, or policy, to determine whether it constitutes such an event.
¶ 39 In this matter, Farm Bureau has argued that the language written into the Lunsford Policy of
¶ 41 Adopting Lunsford’s argument as done by the majority requires this Court to omit the word “applicable” and read the statute as:
An “uninsured motor vehicle,” as described in subdivision (3) of this subsectiоn, includes an “underinsured highway vehicle,” which means a highway vehicle with respect to the ownership, maintenance, or use of which, the sum of the limits of liability under all bodily injury liability bonds and insurance policies applicable at the time of the accident is less than the . . . limits of underinsured motorist coverage for the vehicle involved in the accident and insured under the owner’s policy.
III. Choice of Law
¶ 43 This Court has held in accordance with the principles of lex loci contractus that an automobile insurance policy “should be interpreted and the rights and liabilities of the parties thereto determined in accordance with the laws of the state where the contract was entered even if the liability of the insured arose out of an accident in North Carolina.” Fortune Ins. Co. v. Owens, 351 N.C. 424, 428 (2000) (citing Roomy v. Allstate Ins. Co., 256 N.C. 318, 322 (1962)). However, this Court in Collins construed
¶ 44 The Chapman Policy, however, did not insure any property in North Carolina. Also, as the accident did not occur in North Carolina, neither the Silverado, Chapman, nor Lunsford were in North Carolina at the time of the liability triggering event. Thus, Lunsford’s reliance on Collins for the proposition that North Carolina has a close connection to the interests insured under the Chapman Policy is misplaced.
¶ 45 The Court of Appeals decision in Benton, relied on by Lunsford, also does not support Lunsford’s position. Not only is this decision not binding on this Court, but it is not relevant to the dispute. Benton did not involve or address a policy entered outside of North Carolina. See 195 N.C. App. at 89–90.3
¶
¶ 47 In this matter, it is undisputed that the policy was purchased in Tennessee, owned by a Tennessee resident, and covered a vehicle owned by a Tennessee resident. The accident also did not occur in North Carolina. Thus, all the significant connections occurred in Tennessee. The residency of the passenger at the time of the accident occurred by chance, just as the location of the accident occurred by chance in Owens. Thus, Tennessee law applies to the Chapman Policy. The residency of a passenger in North Carolina at the time of the accident by itself does not constitute a sufficient connection to warrant application of North Carolina law.4
¶ 48 As it is undisputed that underinsured motorist coverage is not capable of being applied under Tennessee law in the facts of this case, there are no “limits of underinsured motorist coverage,” applicable under the Chapman Policy. See
IV. Conclusion
¶ 49 Applying the plain language of the statute dictates that the underinsured motorist coverage of the Chapman Policy must be capable of being applied to be stacked. As Tennessee law applies to the Chapman Policy and excludes underinsured motorist coverage in the facts of this case, the trial court’s judgment in favor of Farm Bureau should be affirmed.
Chief Justice NEWBY and Justice BERGER join in this dissenting opinion.