Tutterow v. Hall, a recent opinion by Judge Dietz of the North Carolina Court of Appeals holds, as a matter of first impression, that when there are multiple underinsured tortfeasors and multiple UIM insurance policies, the total limits of UIM coverage is the difference between the total amount paid under all exhausted liability policies and the total limits of all applicable UIM policies.

This is a case of first impression regarding multiple underinsured tortfeasors and multiple UIM insurance policies.  Decedent was killed in a car accident while she was a passenger in a car driven by Ms. Crump.  The car accident also involved a second vehicle operated by Defendant Brian Hall.  For purposes of the declaratory judgment action, the parties stipulated both Crump and Hall negligently caused the accident.  Crump had an auto policy issued by Horace Mann with $100,000 per person liability and $100,000 per person UIM coverage.  Hall had $100,000 per person liability limits.  Decedent, as a passenger in Crump’s car, was covered under Crump’s $100,000 per person UIM coverage.  Decedent also had an auto policy issued by State Farm with $100,000 per person UIM coverage.

Plaintiff brought a wrongful death action.  Crump’s insurer tendered its $100,000 limits of liability.  Hall’s insurer tendered its $100,000 limits of liability.  Plaintiff notified the UIM carriers of the tenders but advised Plaintiff had not accepted them.  The insurers did not advance coverage under the UIM policies.  Eight months later, Plaintiff informed the UIM carriers he had accepted the $100,000 liability limit of Crump’s policy.  Three months later, State Farm advanced $100,000 to the decedent’s estate under its UIM policy while expressly reserving its “right to recoup funds” should Plaintiff recover from Hall’s liability insurer.  Nearly two years later, Plaintiff informed the UIM carriers that he reached a settlement with Hall that included the $100,000 limits of Hall’s liability policy.  State Farm requested Plaintiff reimburse the $100,000 it advanced years earlier.  Plaintiff brought a declaratory judgment action against State Farm and Horace Mann seeking declaration of the UIM carriers’ coverage obligations and State Farm’s right to reimbursement.  Plaintiff asserted because there were two tort-feasors (Crump and Hall), the applicable UIM coverage applied to both tortfeasors under N.C.G.S. § 20-279.21(b)(4).  As to Crump, Plaintiff argued the following coverage applied: his $100,000 Horace Mann liability, his $100,000 Horace Mann UIM and decedent’s $100,000 UIM policy issued by State Farm.  Plaintiff argued Horace Mann should receive the credit for its payment of the liability coverage.  As to Hall, Plaintiff argued the following coverage applied: his $100,000 Nationwide liability, Crump’s $100,000 UIM policy issued by Horace Mann and decedent’s $100,000 UIM policy issued by State Farm.  Plaintiff alleged the UIM payor should be determined by which of them received the credit for the payment of liability coverage provided by Nationwide on behalf of Hall.  Plaintiff argued the total liability and UIM coverage was $400,000.  Cross-motions for summary judgment were filed.  The trial court entered an order granting summary judgment in favor of the UIM carriers on the ground that the amount of UIM coverage available “is $0.00.”  Plaintiff appealed.

The Court of Appeals held the trial court properly found the decedent was not entitled to UIM coverage.  The crux of this case is how to calculate available UIM coverage when there are multiple underinsured tortfeasors and multiple UIM insurance policies.  Here, there are two tortfeasors whose liability insurers exhausted their policy limits by tendering $100,000 each and two UIM carriers that both provided decedent with $100,000 per person.  N.C.G.S. § 20-279.21(b)(4)[1] governs the

calculation of UIM coverage.  Plaintiff argued the applicable UIM limits were on a per underinsured vehicle basis as opposed to a per accident basis.  Plaintiff contended the stacked UIM of $200,000 applied to Crump’s vehicle, which had only $100,000 in liability limits, and additionally and separately, applied to Hall’s vehicle, which also had only $100,000 in liability limits.

The Tutterow case is a case of first impression regarding how the statutory language applies in a case involving multiple underinsured tortfeasors and multiple UIM insurance carriers.  The first sentence of N.C.G.S. § 20-279.21(b)(4) addresses a scenario where claimant is covered by only one UIM policy.  The second sentence addresses a scenario in which the claimant is covered by more than one UIM policy.  In reaching its decision affirming the trial court’s grant of summary judgment in favor of State Farm, the Court focused on the use of the transitional word “furthermore” which indicates the second sentence provides an additional factor or consideration (the existence of multiple UIM policies that apply to the claimant) distinguishing it from the proceeding statement.

The statute provides an unambiguous method to calculate the applicable limit of combined UIM coverage: the difference between the total amount paid under all exhausted liability policies and the total limits of all applicable UIM policies.  The trial court properly applied the statutory provision by calculating the total amount paid under the exhausted liability policies as $200,000 and total limits of the claimant’s underinsured motorist coverage as $200,000.  The court determined the total limits of UIM coverage is the difference between those two totals and, therefore, the available UIM coverage is $0.00.

The Court disagreed with Plaintiff’s argument that UIM limits were on a per underinsured vehicle basis, as opposed to a per accident basis.  The Tutterow Ruling establishes that in cases involving multiple tortfeasors, UIM limits are determined on a per accident basis.

[1] “In any event, the limit of underinsured motorist coverage applicable to any claim is determined to be the difference between the amount paid to the claimant under the exhausted liability policy or policies and the limit of underinsured motorist coverage applicable to the motor vehicle involved in the accident.  Furthermore, if a claimant is an insured under the underinsured motorist coverage on separate or additional policies, the limit of underinsured motorist coverage applicable to the claimant is the difference between the amount paid to the claimant under the exhausted liability policy or policies and the total limits of the claimant’s underinsured motorist coverages as determined by combining the highest limit available under each policy.”  N.C.G.S. § 20-279.21(b)(4).