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Insurance – Auto – UIM Stacking – Multiple Claimant Exception – Inapplicable

The court rejects an insurer’s interpretation of the multiple claimant exception in G.S. § § 20-279.21(b)(4) because it would limit recovery by innocent passengers depending on whether they were riding with a negligent driver or an innocent driver.

We affirm the trial court’s order granting summary judgment for defendants.

Background

Sa Hietha rear-ended another vehicle, spun into another lane, and collided with a third vehicle. Hietha had five passengers, two of whom were injured in the crash and three of whom died from injuries sustained in the accident.

The plaintiff-insurer provided liability coverage of $50,000 per person and $100,000 per accident for Hietha’s vehicle. The policy also provided underinsured motorist coverage with limits of $50,000 per person and $100,000 per accident.

Plaintiff had also issued separate policies to two of the deceased passengers. Khai Hne’s policy provided UIM coverage of $50,000 per person and $100,000 per accident. Tei Paw’s policy provided UIM coverage of $100,000 per person and $300,000 per accident.

Plaintiff divided its liability limits from Hietha’s policy as follows: $26,000 for each of the passengers who died; $13,000 to injured passenger Tin Aung; $1,500 to injured passenger Nu Cing; $2,500 to the driver of the rear-ended vehicle; and $5,000 to the passenger of the second vehicle struck by Hietha.

Plaintiff sought a declaratory judgment that UIM coverage under Hietha’s policy was “not triggered for any of the [passengers] under the Policy.” The trial court granted summary judgment for the defendant-passengers (or their estates), ruling that “the movant-Defendants are entitled to payment under at-fault Sa Hietha’s per-person underinsured motorist coverage provided by Plaintiff, subject to any applicable credits.”

Discussion

G.S. § 20-279.21(b)(4) defines “uninsured motor vehicle,” and a 2004 amendment added these two sentences: “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.”

This court has dubbed the second sentence of the amendment the “multiple claimant exception.” The multiple claimant exception applies only when the amount paid to an individual claimant is less than the claimant’s limits of UIM coverage after liability payments to multiple claimants.

Plaintiff argues that, by adopting the multiple claimant exception, the General Assembly sought “to broaden UIM coverage only for occupants of an innocent operator’s vehicle . . . and expressly excludes occupants of a tortfeasor’s vehicle from the expanded UIM coverage. . . .” We disagree.

The General Assembly added the multiple claimant exception in an effort to further protect innocent victims of financially irresponsible motorists. To construe the multiple claimant exception to limit UIM recovery to innocent occupants of a tortfeasor’s vehicle, while allowing recovery by innocent occupants of an innocent operator’s vehicle, would be an interpretation which results in injustice.

Because the multiple claimant exception does not apply, the trial court properly permitted defendants to recover UIM coverage under their own policies and the UIM coverage under Hietha’s policy.

Affirmed.

Concurrence

(Dietz, J.) I write separately to emphasize that we address the General Assembly’s intent and the potential for injustice in this case only because § 20-279.21(b)(4) is ambiguous.

Nationwide Affinity Insurance Co. of America v. Bei (Lawyers Weekly No. 011-171-18, 16 pp.) (Robert Hunter Jr., J.) (Richard Dietz, J., concurring) Appealed from Wake County Superior Court (A. Graham Shirley II, J.) George Simpson IV for plaintiff; Paul Tharp for defendants. N.C. App.

 

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