Farm Bureau Mut. Ins. Co. v. Armwood

CALABRIA, Judge. North Carolina Farm Bureau Mutual Insurance Company, Inc. ("Farm Bureau") appeals from an order granting summary judgment entered in favor of defendants on the issue of the minimum amount of liability coverage required in an insurance policy for a not-for-hire commercial vehicle. We affirm. On 7 October 2001, eight-year-old Terry Davis Armwood, Jr. ("T.J") was injured when he was struck by a vehicle after exiting a 1974, 30-passenger bus owned and operated by Jimmy Lee Best ("Best") and insured by a policy issued by Farm Bureau. Best purchased the policy on 4 June 2001 from Stella Bostic ("Bostic"). When Bostic sold the policy to Best, she offered liability amounts providing $750,000.00 in coverage per accident with $5,000.00 for medical payments per accident and Uninsured/Underinsured Motorist Coverage of $750,000.00. When Best refused the amounts offered, Bostic crossed through the original liability amounts and changed the policy limits to $50,000/$100,000/$25,000 per accident, $1,000 for medical payments, and Uninsured/Underinsured Motorist Coverage of $50,000/$100,000/$25,000, per Best's request. After the accident, Terry Davis Armwood, Sr. and Ramona Armwood (collectively "the Armwoods") filed a claim with Farm Bureau on behalf of their son, T.J. Farm Bureau offered to settle the claim for $50,000.00, the limit of Best's insurance policy. The Armwoods rejected Farm Bureau's settlement offer and demanded damages in excess of the $50,000.00 policy limit. On 30 October 2003, Farm Bureau filed a declaratory relief action requesting the Wake County Superior Court to determine the scope and amount of coverage provided by Farm Bureau under the policy for any damages caused by the 7 October 2001 accident. Farm Bureau, the Armwoods, and Bostic filed motions for summary judgment. The court granted Bostic's summary judgment motion dismissing all claims against her. The court also granted the Armwoods' summary judgment motion to the extent that the insurance policy was "reformed" to reflect a minimum coverage of $750,000.00 and denied Farm Bureau's motion for summary judgment. Farm Bureau appeals the order granting summary judgment in favor of the Armwoods and denying Farm Bureau's summary judgment motion. We affirm. Our standard of review for an order granting summary judgment is de novo. Stafford v. County of Bladen, 163 N.C.App. 149, 151, 592 S.E.2d 711, 713 (2004), appeal dismissed by, 358 N.C. 545, 599 S.E.2d 409 (2004). Summary judgment is appropriate when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. Leake v. Sunbelt, Ltd. of Raleigh, 93 N.C.App. 199, 201, 377 S.E.2d 285, 287 (1989). "[I]n considering summary judgment motions, we review the record in the light *924most favorable to the nonmovant." Id. "When the facts of a case are undisputed, construction and application of an insurance policy's provisions to those facts is a question of law." McGuire v. Draughon, 170 N.C.App. 422, 424, 612 S.E.2d 428, 430 (2005). This case presents an issue of first impression: When a passenger bus transports passengers without requiring payment for services, should the insured or the insurer bear the responsibility of including the minimum statutory requirements of N.C. Gen.Stat. § 20-309(a1) in the liability policy if the bus is classified as a not-for-hire commercial vehicle? Farm Bureau contends the owner is responsible for ensuring that liability coverage meets the minimum statutory requirements.1 Farm Bureau argues that because N.C. Gen. Stat. § 20-309(a1) specifically states that the owner shall have financial responsibility, it is on the owner of a vehicle to obtain the appropriate level of liability insurance. The Armwoods contend that Best charged money to transport children in addition to the use of the bus for church purposes and therefore, the mandatory coverage for the bus was the coverage required for a passenger bus for-hire and should have exceeded $750,000.00. The basic rule of statutory interpretation is that the intent of the Legislature controls. Campbell v. First Baptist Church, 298 N.C. 476, 484, 259 S.E.2d 558, 564 (1979). This intent may be determined by considering the language of the statute, the spirit of the act, and what the act seeks to accomplish. Taylor v. Taylor, 343 N.C. 50, 56, 468 S.E.2d 33, 37 (1996). "The purpose of [The Financial Responsibility Act of 1957] is to assure the protection of liability insurance, or other type[s] of established financial responsibility, up to the minimum amount specified in the act, to persons injured by the negligent operation of a motor vehicle upon the highways of this State." Pearson v. Nationwide Mutual Ins. Co., 325 N.C. 246, 253, 382 S.E.2d 745, 748 (1989). In order to effectuate the purpose of the Financial Responsibility Act of 1957, "the provisions [of the Act] must be read into insurance policies and [must be] construed liberally." Id. Section 20-309 of the North Carolina General Statutes addresses the financial responsibility required for registration of vehicles. It reads in pertinent part: (a) No motor vehicle shall be registered in this State unless the owner at the time of registration has financial responsibility for the operation of such motor vehicle, as provided in this Article. The owner of each motor vehicle registered in this State shall maintain financial responsibility continuously throughout the period of registration. (a1) An owner of a commercial motor vehicle, as defined in G.S. 20-4.01(3d), shall have financial responsibility for the operation of the motor vehicle in an amount equal to that required for for-hire carriers transporting nonhazardous property in interstate or foreign commerce in 49 C.F.R. § 387.9. N.C. Gen.Stat. § 20-309(a) and (a1)(2005). Under § 20-309(a), an owner of a vehicle may not register the vehicle unless the owner has an insurance policy or another type of financial responsibility in place that meets the minimum liability coverage as required by § 20-279.1. Our Courts have consistently held that the minimum liability coverage required by § 20-279.1 is "written into every insurance policy as a matter of law." Integon Indemnity Corp. v. Universal Underwriters Ins. Co., 342 N.C. 166, 168, 463 S.E.2d 389, 390-91 (1995); McLeod v. Nationwide Mutual Ins. Co., 115 N.C.App. 283, 287, 444 S.E.2d 487, 490 (1994). Thus, even though § 20-309(a) requires the owner to obtain financial responsibility in order to register a vehicle, the owner is not responsible for ensuring that the insurance policy contains the minimum liability coverage imposed by statute. The minimum liability coverage is written into each insurance policy as a matter of law. Similarly, § 20-309(a1) requires the owner of a not-for-hire commercial vehicle to obtain an insurance policy or other financial *925responsibility in order to register the vehicle. It follows that just as the minimum liability coverage requirements for vehicles registered under § 20-309(a) are written into insurance policies as a matter of law, so too are the minimum liability coverage requirements for not-for-hire commercial vehicles registered under § 20-309(a1). In effect, this does not place a burden on either party to ensure that liability coverage meets the minimum statutory requirements, but it inserts the provisions of § 20-309(a1), as a matter of law, into every insurance policy issued for not-for-hire commercial vehicles. See Integon, 342 N.C. at 168, 463 S.E.2d at 390-91; McLeod, 115 N.C.App. at 287, 444 S.E.2d at 490. Further, writing the minimum liability coverage into insurance policies for vehicles registered under § 20-309(a1) as a matter of law promotes the main purpose of the Financial Responsibility Act - protecting innocent motorists. See Pearson, 325 N.C. at 253, 382 S.E.2d at 748. Farm Bureau argues that N.C. Gen.Stat. § 62-268, which pertains to for-hire commercial vehicles, specifically provides that liability coverage may be obtained through multiple insurance policies. Farm Bureau further argues that because § 62-268 and § 20-309(a1) pertain to commercial vehicles and the only factor that determines which statute applies is whether the commercial vehicle is used for hire, the two statutes should be construed together. Thus, Farm Bureau argues, § 20-309(a1) allows the owner of a not-for-hire commercial vehicle to obtain the required financial responsibility through multiple insurance policies thereby placing the responsibility to ensure that the minimum coverage has been obtained upon the owner. We disagree. Basic canons of statutory interpretation provide that "[s]tatutes in pari materia are to be construed together, and it is a general rule that the courts must harmonize such statutes, if possible, and give effect to each...." Faizan v. Insurance Co., 254 N.C. 47, 53, 118 S.E.2d 303, 307 (1961). "[A]ll applicable laws on the same subject matter should be construed together so as to produce a harmonious body of legislation, if possible." Id. Section 20-279.21 is part of the Financial Responsibility Act of 1953, and § 20-309(a1) is part of the Financial Responsibility Act of 1957. Both acts pertain to the same subject matter - the financial responsibility of motorists. Thus, "[t]he two acts are to be construed together so as to harmonize their provisions and to effectuate the purpose of the Legislature." Harrelson v. Insurance Co., 272 N.C. 603, 610, 158 S.E.2d 812, 818 (1968). See also, Odum v. Nationwide Mutual Ins. Co., 101 N.C.App. 627, 631, 401 S.E.2d 87, 90 (1991) ("The two Acts are complementary and are to be construed in pari materia so as to harmonize them and give effect to both."). In sharp contrast to Farm Bureau's argument, § 62-268 is found under chapter 62 - a chapter devoted to an entirely different body of law. Chapter 62 regulates public utilities and contains specific provisions for motor carriers. If the Legislature intended for statutes concerning not-for-hire commercial vehicles to be interpreted in conjunction with statutes concerning for-hire vehicles, it could have included the statutes in the same chapter or referenced the provisions of § 62-268. Therefore, because § 20-279.21 and § 20-309 have an identical purpose - protecting the innocent from irresponsible drivers - it is proper that these statutes are interpreted in a consistent manner in order to give effect to the intent and purpose of the Legislature. Construing these statutes in pari materia, we hold that just as provisions of N.C. Gen. Stat. § 20-279.21 are read into every insurance policy as a matter of law, provisions of N.C. Gen.Stat. § 20-309(a1) are also read into every insurance policy as a matter of law. This is to effectuate the purpose of the Financial Responsibility Act - protecting the innocent from irresponsible motorists. See Pearson, 325 N.C. at 253, 382 S.E.2d at 748. We have considered Farm Bureau's remaining arguments and determined they are without merit. The trial court properly granted the Armwoods' summary judgment motion to the extent that it reformed the insurance policy to include the amount of minimum coverage required by § 20-309(a1), and it properly denied Farm Bureau's summary judgment motion. For the reasons *926stated herein, we affirm the order of the trial court. Affirmed. Judges HUDSON concurs. Judge HUNTER dissents in a separate opinion. The Judges participated in this decision and submitted it for filing prior to 1 January 2007. Footnotes [1.] Defendants-appellees asserted during oral arguments that Farm Bureau had issued an MCS-90 Form along with Best's insurance policy. However, this issue was not addressed in defendants-appellees' brief and therefore, will not be considered.