Insurance dispute results in $100K settlement for injured man

The defendant-vehicle operator operated a Chevrolet van owned by the defendant-auto sales company. The van struck the defendant-injured person while the injured person was in the process of unloading and then reloading newspapers from the van.

It is believed that the vehicle operator pushed the gas pedal instead of the brake, causing the van to strike the injured person, crushing his left foot, causing a non-displaced mid-shaft tibia fracture and a non-displaced Weber B distal fibula fracture. The injured person had to undergo IM nail stabilization of his tibia fracture, while also maintaining short leg cast over his fibula fracture.

At the time of the accident, both the injured person and the vehicle operator were each covered as insureds by a personal automobile liability policy. Also, at the time of the accident, the auto sales company had in effect a garage policy of insurance for its vehicles.

Insurance Company A, which provided the garage policy of the defendant-auto sales company denied coverage, filed a declaratory-judgment action. Counsel for the plaintiff-Insurance Company A (the auto sales company’s insurer – garage policy) filed suit requesting a declaratory judgment alleging that the 1992 van operated by the vehicle operator was not a “covered auto” as defined in the policy; and in the alternative that if the van were a “covered” auto,” the vehicle operator still did not meet the definition of “insured” as defined in its policy.

Further, the plaintiff alleged that the injured person was not in, upon, getting in, on, out, or off of the 1992 van, therefore he was not an insured for uninsured/underinsured motorist coverage under its policy.

The limits for defendants’ garage policy for UM/UIM coverage were $100,000 per person and $300,000 per accident. The plaintiff also alleged that the vehicle operator was covered under his personal automobile liability policy and or through the injured person’s personal automobile liability policy as operating a “covered auto” with the permission of the insured, as it considered the 1992 van qualified as a temporary substitute vehicle.

Counsel for the defendant-injured person contended that the injured person and the vehicle operator were using the 1992 van with the permission of the auto sales company, and its owner, with the injured person delivering newspapers and the vehicle operator distributing satellite television flyers on a common distribution route.

The defendant-injured person alleged that the owner of the auto sales company also had business/ownership interests in the newspaper and satellite television provider. Counsel for the defendant-injured person contended the auto sales company owner procured or attempted to procure the policy for the auto sales company specifically requesting UM/UIM coverage of $100,000/$300,000/$50,000 from the carrier’s agent, including UM/UIM for vehicles used by permissive users such as the injured person, and that the defendant injured person was either entitled to $100,000 from the liability coverage or the UM/UIM coverage.

Counsel for the defendant injured person contended if there were no UM/UIM coverage then the agent negligently failed to procure the requested coverage. The plaintiff-insurance company contended that it sold UM/UIM coverage for “Only those ‘autos’ you own that because of the law in the state where they are licensed or principally garaged are required to have and cannot reject Uninsured Motorist Coverage. This includes those ‘autos’ you acquire ownership of after the policy begins provided they are subject to the state uninsured motorist requirement.” However, counsel for the defendant-injured person contended that the auto sales company had no owned auto licensed or garaged anywhere but North Carolina, therefore if the plaintiff’s contentions were accurate, such coverage would be “illusory” coverage in violation of North Carolina law and an unfair and deceptive trade practice.

Settlement Report

Type of action: Insurance coverage declaratory-judgment action filed by carrier. Varying counterclaims, cross-claims and third-party complaint for motor vehicle negligence, unfair and deceptive trade practices (including illusory coverage); waiver, estoppel, reformation, negligent failure to procure.

Injuries alleged: Crush injury to left tibia with non-displaced mid-shaft and distal tibia fracture and Weber B ankle fracture

Case name: Insurance Company A (Auto Sales Company’s Insurer) v. Auto Sales Company, Injured Person, Vehicle Operator, Insurance Company B, and Insurance Company C v. Insurance Agent (Auto Sales Company’s Insurance Agent), Auto Sales Company Owner and various purportedly related business entities

Case number: Withheld

Court: Withheld

Verdict or settlement: Settlement

Date: August 2009 (the injured person resolved all claims). However, there remained claims between the insurance carriers, and the matter was slated for trial in early 2010.

Amount: $100,000 from Insurance Company A

Special damages: $32,500 in medical expenses, plus some lost wages

Insurer: Withheld

Defendant’s attorney: C. Douglas Maynard Jr., of Maynard & Harris Attorneys at Law (Winston-Salem), represented the defendant-injured person

Editor’s note: The information in Lawyers Weekly’s verdicts and settlements reports was submitted by the counsel for the prevailing party and represents the attorney’s characterization of the case.