Daughtry v. Castleberry

McGEE, Judge. The trial court ruled USAA waived its subrogation rights under N.C. Gen. Stat. § 20-279.21(b)(4) by failing to advance the $100,000 tendered by Nationwide within 30 days of USAA’s receipt of the 14 May 1992 letter from Bob Harrelson advising that Nationwide was tendering its policy limits. Plaintiffs argue USAA was not required to advance the $100,000 within 30 days of receipt of the written notice because: 1) written notice of the settlement must come from the insured, not the liability carrier; and 2) the 30 day time limit does not begin to run until the UIM insured reaches a final settlement with the underinsured motorist. We disagree and affirm the order of the trial court. Plaintiffs first contend written notice of the settlement offer must be made by the UIM insured to the UIM carrier. The statute governing subrogation rights of UIM carriers requires, in part, that: No insurer shall exercise any right of subrogation or any right to approve settlement with the original owner, operator, or maintainer of the underinsured highway vehicle under a policy providing coverage against an underinsured motorist where the insurer has been provided with written notice before a settlement between its insured and the underinsured motorist and the insurer fails to advance a payment to the insured in an amount equal to the tentative settlement within 30 days following receipt of that notice. G.S. 20-279.21(b)(4) (emphasis added). Although the better practice would be for the insured to notify the UIM carrier when the insured has received an acceptable offer from the liability carrier, there is nothing in the statute which requires written notice to the UIM insurer be made directly by the insured. The statute simply requires [674] that written notice be given to the UIM carrier before the 30 day period in which to preserve subrogation rights begins to run. Plaintiffs argue this allows a liability carrier to “make many offers and copy them to the [UIM] carrier with no idea whatsoever that the injured party might accept any of the offers,” and would require the UIM carrier “to advance payment based on all offers of any kind, regardless of whether it was one acceptable to the injured party, its insured.” However, we see no problem in cases where, as here, the liability carrier has offered its policy limits in settlement of the injured party’s claims. In this case, USAA received written notice that Nationwide had offered its liability limit to plaintiffs by way of the 14 May 1992 letter sent by Nationwide to USAA. USAA further acknowledged it had notice of Nationwide’s settlement offer in the 29 May 1992 letter from USAA to plaintiffs. Therefore, USAA received proper written notice of the settlement offer as required by G. S. 20-279.21(b)(4). This assignment of error is overruled. Plaintiffs next contend the 30 day period did not begin to run because the 8 April 1992 offer of settlement, forwarded to USAA on 14 May, “was merely a preliminary negotiation or offer” and “not an actual settlement between the plaintiffs and Nationwide.” Plaintiffs argue that a UIM carrier “cannot know when payment must be advanced to its insured until it knows when its insured has agreed to or accepted the terms of the offer.” Because the 8 April offer contained different structured settlement options and was conditioned upon the plaintiffs signing a release, and USAA had no notice of plaintiffs’ acceptance of the offer, plaintiffs contend the 14 May letter from Nationwide did not trigger the 30 day period. We again disagree. The statute states that “where the insurer has been provided with written notice before a settlement” the insurer waives its subrogation rights unless it advances a payment to the insured “in an amount equal to the tentative settlement” within 30 days of receipt of the-written notice. G.S. 20-279.21(b)(4) (emphasis added). Further, in Gurganious v. Integon General Ins. Corp., 108 N.C. App. 163, 423 S.E.2d 317 (1992), disc. review denied, 333 N.C. 538, 429 S.E.2d 558 (1993), this Court held an insurer waived its right to subrogation where the insurer failed to advance the amount of the liability insurer’s settlement offer. This Court recognized that G.S. 20-279.21(b)(4) requires that a UIM insurer be notified “when a claim is filed against the primary tort-feasor, and also when a settlement [675] offer has been made.” Gurganious, 108 N.C. App. at 166, 423 S.E.2d at 318 (emphasis added). This Court also found: Plaintiffs in this case properly notified defendant of the claim as well as the settlement offer. In accordance with the statute, when the primary liability insurance carrier offered the limits of its policy in settlement, [the UIM carrier] could have paid that amount to plaintiffs, thereby preserving its subrogation rights. However, [the UIM carrier] chose not to follow that course. Id. at 166, 423 S.E.2d at 318-19 (emphasis added). Both the statute and case law require a UIM insurer be notified when a settlement offer is made, and when the primary liability insurance carrier has offered the limits of its policy in settlement, as was done in this case, the insurer must advance that amount to the insured within 30 days to protect its subrogation rights. Neither the statute nor case law require that the settlement be completed or that the UIM carrier must have notice of its insured’s acceptance of the offer. Therefore, this assignment of error is also overruled. Here, the evidence shows USAA received written notice sometime between 14 May 1992 and 29 May 1992 that Nationwide had offered its $100,000 policy limit in settlement of plaintiffs’ claims. However, USAA waited until 29 July 1992 to advance the amount of Nationwide’s settlement offer to plaintiffs. Therefore, USAA waived its subrogation rights by not advancing the $100,000 to plaintiffs within 30 days of receipt of written notice of Nationwide’s settlement offer. After reviewing the record, we find no merit to plaintiffs’ remaining arguments. For the reasons stated, the order of the trial court is affirmed. Affirmed. Judge WYNN concurs. Judge GREENE dissents.