Cahoon v. Canal Insurance Co.

HORTON, Judge. Appellants contend that they complied with the provisions of N.C. Gen. Stat. § 58-35-85 in cancelling the policy issued to plaintiff Cahoon, and argue that the trial court erred in ruling otherwise. We agree, and grant summary judgment in favor of the appellants, Agency and Canal. N.C. Gen. Stat. § 58-35-85 sets out the procedure for cancellation of an insurance policy by an insurance premium finance company: When an insurance premium finance agreement contains a power of attorney or other authority enabling the insurance premium finance company to cancel any insurance contract or contracts listed in the agreement, the insurance contract or contracts shall not be cancelled unless the cancellation is effectuated in accordance with the following provisions: (1) Not less than 10 days’ written notice is sent by personal delivery, first-class mail, electronic mail, or facsimile transmission to the last known address of the insured or insureds shown on the insurance premium finance agreement of the intent of the insurance premium finance company to cancel his or their insurance contract or contracts unless the defaulted installment payment is received. Notification thereof shall also be provided to the insurance agent. (2) After expiration of the 10-day period, the insurance premium finance company shall send the insurer a request for cancellation and shall send notice of the requested cancellation to the insured by personal delivery, first-class mail, electronic mail, electronic transmission, or facsimile transmission at his last known address as shown on the records of the insurance premium finance company and to the agent. Upon written request of the insurance company, the premium finance company shall furnish a copy of the power of attorney to the insurance company. The written request shall be sent by mail, personal delivery, electronic mail, or facsimile transmission. (3) Upon receipt of a copy of the request for cancellation notice by the insurer, the insurance contract shall be cancelled with the same force and effect as if the request for cancellation had been submitted by the insured, without requiring the return of the insurance contract or contracts. [580] N.C. Gen. Stat. § 58-35-85 (1999). Thus, written notice of the intent to cancel a policy must be given to the insured at least ten days before cancellation of the policy, giving the insured an opportunity to pay the past-due premium and retain insurance coverage. Plaintiff does not contest receipt of the Notice of Intent to Cancel dated 12 December 1996. Nor does he contend that he tendered the past-due premium prior to 30 December 1996, the effective date of cancellation. He argues, however, that there were several defects in the purported cancellation of his policy. Plaintiff contends, and we agree, that the burden of proving compliance with N.C. Gen. Stat. § 58-35-85 is on the insurance company. We have repeatedly held that “the burden is upon the insurance company to show that all statutory requirements have been complied with, including the ten days written notice by the premium finance company to the insured together with said notice to the insurance agent, prior to the premium financing company requesting cancellation of the policy.” Grant v. Insurance Co., 1 N.C. App. 76, 80, 159 S.E.2d 368, 371, cert. denied, 273 N.C. 657 (1968). “[T]he burden of proving cancellation by the insured or his agent [is] on the insurance company.” Ingram v. Insurance Co., 5 N.C. App. 255, 258, 168 S.E.2d 224, 227, cert. denied, 275 N.C. 595 (1969). “In order to cancel a policy the carrier must comply with the procedural requirements of the statute or the attempt at cancellation fails and the policy will continue in effect despite the insured’s failure to pay in full the required premium.” Pearson v. Nationwide Mutual Ins. Co., 325 N.C. 246, 254, 382 S.E.2d 745, 748 (1989). The policy is considered cancelled as of the date the insurance company receives the request for cancellation. Unisun Ins. Co. v. Goodman, 117 N.C. App. 454, 457, 451 S.E.2d 4, 6 (1994), disc. review denied, 339 N.C. 742, 454 S.E.2d 662 (1995); N.C. Gen. Stat. § 58-35-85(3). Plaintiff first argues that the defendants violated the express terms of the policy in their cancellation effort. Plaintiffs insurance policy stated, however, that “[t]his policy may be cancelled by the named insured by surrender thereof to the company or any of its authorized agents or by mailing to the company written notice stating when thereafter the cancellation shall be effective.” Agency Services, Inc. (Agency), the premium finance company, used a Finance Agreement throughout its dealings with plaintiff. The Finance Agreement appointed Agency as plaintiffs “attorney in fact” and allowed Agency “in the event of nonpayment of the installments . . . to authorize and give notice of the cancellation of the insurance pol [581] icy[] . . . .” Furthermore, “[i]n the event the insured defaults under these conditions, and after notice is given under applicable state law [Agency] may request cancellation of any policy . ...” If a default occurred, Agency was to send written notice of default to plaintiff Cahoon; if the default was not rectified, Agency was to then send written Notice of Cancellation to Canal and give plaintiff a copy of that Notice. We hold that Agency complied with the cancellation provisions of the Finance Agreement, which provisions track the language of N.C. Gen. Stat. § 58-35-85. On 12 December 1996, following plaintiffs failure to pay his December premium, Agency sent him a Notice of Intent to Cancel his policy effective 30 December 1996. On 26 December 1996, Agency mailed plaintiff a Notice of Cancellation, again advising him that his policy would be cancelled effective 30 December 1996. Finally, on 30 December 1996, Agency mailed to Canal and its agent, Piedmont, a Request for Cancellation of plaintiffs policy. In summary, N.C. Gen. Stat. § 58-35-85 requires that an insured be given at least ten days in which to make any past-due premium payments and retain insurance coverage. Here, the uncontradicted evidence is that plaintiff Cahoon was given more than 10 days’ notice before his policy was cancelled. Thus, the statutory notice requirement was satisfied and this assignment of error is overruled. Next, plaintiff argues that Agency failed to comply with several other mandatory requirements of N.C. Gen. Stat. § 58-35-85. Specifically, plaintiff contends that Agency did not ensure that Canal received a copy of the power of attorney executed by him, either prior to or together with the “Request for Cancellation.” Plaintiff ignores the explicit language of N.C. Gen. Stat. § 58-35-85(2), however, which provides that “[u]pon written request of the insurance company, the premium finance company shall furnish a copy of the power of attorney to the insurance company.” (Emphasis added.) Nothing in this record indicates that either Canal or its agent Piedmont made a request, written or otherwise, for a copy of the power of attorney. Plaintiff also argues that Agency prematurely sent the Notice of Cancellation to Piedmont. The original Notice of Intent to Cancel was dated 12 December 1996 and informed plaintiff that his policy would be cancelled effective 30 December 1996 for non-payment of premium. The Notice of Cancellation was dated 26 December 1996 and requested that the insurance policy issued to plaintiff be cancelled [582] effective 30 December 1996. Plaintiff argues that the Notice of Cancellation should have been mailed after 30 December 1996, the period of time within which he could make payment of his past-due premium. Plaintiffs argument centers around the language of N.C. Gen. Stat. § 58-35-85(2), which provides that “[ajfter expiration of the 10-day period, the insurance premium finance company shall send the insurer a request for cancellation . . . .” (Emphasis added.) After careful consideration, we disagree with plaintiffs contention. The requirement that an insured have a full ten days’ notice has been examined and upheld in several of our decisions. See Paris v. Woolard, 128 N.C. App. 416, 497 S.E.2d 283, disc. review denied, 348 N.C. 283, 502 S.E.2d 843 (1998) (seven days’ notice held insufficient); Graves v. ABC Roofing Co., 55 N.C. App. 252, 284 S.E.2d 718 (1981) (five days’ notice held insufficient); Grant, 1 N.C. App. at 80, 159 S.E.2d at 371 (premium finance company’s request “that subject policy be cancelled effective as soon after this date as statutory requirements permit” deemed an ineffective cancellation because of vagueness and because less than ten days elapsed between Notice of Cancellation and Request for Cancellation). Here, Agency gave plaintiff an 18-day period — from 12 December 1996 to 30 December 1996 — within which to make his past-due premium payment. Plaintiff argues that Agency should not have mailed the Notice of Cancellation sooner than 31 December 1996, after the end of that 18-day period. Assuming for the sake of argument that the Notice of Cancellation was prematurely mailed to plaintiff, we fail to discern any prejudice to him. Both the Notice of Intent to Cancel and the Notice of Cancellation state the effective date of cancellation as 30 December 1996. Further, the Notice of Cancellation was mailed by Agency to Piedmont, as agent for Canal, on 30 December 1996 and received by Piedmont on 2 January 1997. The applicable statute provides for cancellation of the insurance contract “[u]pon receipt of a copy of the request for cancellation notice by the insurer . . . .” N.C. Gen. Stat. § 58-35-85(3). Thus, the policy in question was not can-celled until Piedmont, as agent for Canal, received the Notice of Cancellation on 2 January 1997. See Unisun, 117 N.C. App. at 457, 451 S.E.2d at 6 (stating that an insurance policy is deemed cancelled as of the date the insurance company receives the Request for Cancellation). Finally, plaintiff argues that the purported cancellation of his policy violates regulations promulgated pursuant to N.C. Gen. Stat. [583] § 58-35-85. North Carolina Administrative Code title 11, r. 13.0317 requires “ten-day written notice of intent to cancel as described in G.S. § 58-35-85(1),” and requires that a copy of the Notice of Intent to Cancel must be “sent to the insurance agent shown on the premium finance agreement at the same time notice is given to the insured.” N.C. Admin. Code tit. 11, r. 13.0317 (June 1998). It appears from the record that a copy of the Notice of Intent to Cancel was forwarded to plaintiff’s insurance agent. An affidavit prepared by Barbara Thomas, the Customer Service Manager at Agency Premium Services, Inc., states in pertinent part: 6. That based on her review of her file, a Notice of Intent to Cancel was mailed on December 12, 1996 to Carlton Joedy Cahoon to the last known address of Carlton Joedy Cahoon shown on the Premium Finance Agreement; further, that a Notice of the intent to cancel was also mailed to SIA Tideland, the insurance agent. (Emphasis added.) It appears from Ms. Thomas’s affidavit that the Notice of Intent to Cancel was mailed to SIA Tideland, the insurance agent, and plaintiff Cahoon, as required by the regulations. Ms. Thomas’s affidavit is neither impeached nor contradicted by evidence for plaintiff. This assignment of error is also overruled. While we agree with the trial court that there are no genuine issues of material fact with regard to the circumstances surrounding the cancellation of plaintiff’s policy, we hold that Agency complied with the statutory and regulatory scheme for the cancellation of plaintiff’s insurance policy and that the trial court erred in entering summary judgment for plaintiff. Instead, summary judgment should be entered for defendant appellants Canal and Agency. Therefore, the trial court’s grant of summary judgment in favor of plaintiff is hereby reversed and the case is remanded to the trial court with directions that summary judgment be entered in favor of Canal Insurance Company, Agency Services, Inc., and Agency Premium Services, Inc. Reversed and remanded with directions. Judges WALKER and McGEE concur.