Morales v. Greensboro Contracting Corp. (Lawyers Weekly No. 12-16-0003, 12 pp.) (Cheri Beasley, J.) Appealed from the Industrial Commission. N.C. App. Unpub. Click here for the full-text opinion.
Holding: Even though an insurance agent failed to carry out the insured employer’s instruction to cancel its workers’ compensation policy with the Cincinnati Casualty Co., since the employer’s letter made it clear that the employer intended to cancel the policy effective Aug. 1, 2005, and since Cincinnati retroactively canceled the policy once it learned of the cancellation, the parties’ intentions control. The employer’s new insurer is not entitled to contribution from Cincinnati.
We reverse the Industrial Commission’s ruling in favor of the new insurer.
Plaintiff was seriously injured while working for the defendant-employer on Aug. 5, 2005. The employer’s new insurer has paid all the benefits due to plaintiff.
The Commission ruled that the employer’s attempted cancellation of its Cincinnati workers’ compensation policy was ineffective, so the Commission required Cincinnati to pay contribution to the employer’s new insurer.
The agency agreement between insurance agency Senn Dunn Marsh and Roland (Dunn) and Cincinnati did not give Dunn express authority to cancel insurance contracts.
In general, one who is authorized or employed to procure insurance does not thereby acquire any authority to cancel the policies after they are procured.
The defendant-employer’s owner and president, Robert Isner, delivered a written cancellation to Dunn. Although cancellation may have exceeded Dunn’s actual express authority under the agency agreement, Isner believed that cancellation was within the scope of Dunn’s authority. Moreover, Cincinnati, when it received actual knowledge of the written cancellation, accepted Isner’s cancellation as valid even though Dunn did not have express authority to cancel contracts. Cincinnati thus approved an extension of Dunn’s authority.
Although Dunn acted without express authority to cancel, all parties involved in the contract believed Dunn had authority to cancel the policy and the principal, Cincinnati, approved the cancellation. Therefore, we hold that Dunn acted within the scope of its employment when it accepted the cancellation from Isner.
We conclude that Isner’s Aug. 1, 2005 notice to Dunn was imputed to Cincinnati, the principal.
The Industrial Commission also concluded that the workers’ compensation policy was not effectively cancelled because the policy required the employer to give Cincinnati advance notice of cancellation, but the employer’s letter requested cancellation on the same day the letter was sent.
The intentions of both parties to the contract are controlling. The employer intended to cancel the contract, and Cincinnati, upon receiving actual knowledge of the employer’s intent to cancel, accepted the employer’s request to cancel effective Aug. 1, 2005, the date of the request. The Commission erred by limiting its inquiry to the express terms of the agreement and ignoring the actual intentions of the parties to the contract.
Interpretation of the policy provisions is unnecessary where the intentions of the parties to the contract are not at issue. The new insurer argues that the cancellation was not effective because the same-day notification did not constitute advance notice.
The only parties to the contract are the employer and Cincinnati, and their intentions are dispositive. Therefore, the Commission erred in concluding that Isner’s Aug. 1, 2005 letter was ineffective to cancel the contract where both parties to the contract agreed that the contract was canceled on Aug. 1, 2005. We conclude that the contract was canceled on Aug. 1, 2005.
Furthermore, there is no basis for quasi-estoppel as found by the Commission. Cincinnati received unauthorized premiums made by Dunn on behalf of the employer. After a 2006 audit, Cincinnati retroactively canceled the employer’s policy and credited Dunn with the return of the unauthorized payments.
Estoppel is not applicable because Cincinnati incurred no benefit where it returned the unauthorized premiums. Also, applying the rule of estoppel in this situation would be contrary to equity where the Commission held Cincinnati responsible for half of all medical and indemnity compensation for plaintiff, although (1) the employer intended to cancel its policy; (2) the employer believed that the policy was cancelled; (3) the employer never paid any more premiums after Aug. 1, 2005; and (4) the premiums that were paid “on behalf” of the employer were unauthorized and ultimately returned to Dunn.