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              Memorandum Opinion and Order Granting in Part and Denying in Part Defendant’s Motion for Summary Judgment and Denying Plaintiff’s Motion for Summary Judgment. The Court considered cross-motions for summary judgment in a dispute arising from the Defendant’s handling of insurance claims against the Debtor for his liability in a two-car automobile accident. The Plaintiff-Trustee sought damages for (1) violations of the North Carolina unfair and deceptive practices statute, N.C. Gen. Stat. § 75-1.1 (the “UDP”), (2) breach of contract, (3) breach of the implied covenant of good faith and fair dealing, (4) bad faith failure to settle, and (5) negligence and gross negligence.

               First, the Plaintiff argued that the Defendant violated the UDP by engaging in unfair claim settlement practices as defined by N.C. Gen. Stat. § 58-63-15(11) and intentionally concealing its bad faith failure to settle the claims. See Guessford v. Pa. Nat’l Mut. Cas. Ins. Co., 983 F. Supp. 2d 652, 660 (M.D.N.C. 2013). Among other things, the Plaintiff alleged that the Defendant failed to timely respond to a time-limited demand and misrepresented to the Debtor that it had a continuing duty to defend him—even after all claims had been resolved and the Debtor’s interests no longer aligned with those of the Defendant. The Plaintiff also argued that the Defendant intentionally sought to conceal its bad faith failure to settle the claims. The Court denied both summary judgment motions on the majority of the Plaintiff’s bases under N.C. Gen. Stat. § 58-63-15(11), allowing the claims to proceed to trial. However, the Court granted summary judgment to the Defendant with respect to the Plaintiff’s allegations that it misrepresented (1) that it would timely inform the Debtor of settlement demands and (2) the insurance policy’s applicable coverages.

               Second, the Plaintiff asserted that the Defendant breached the express provisions of the insurance policy. However, the Court found the undisputed facts demonstrated the Defendant ultimately complied with its contractual obligations to pay damages for bodily injury or property damage and paid compensatory damages for which the Debtor was legally entitled. Accordingly, the Court granted summary judgment for the Defendant on this claim.

               Third, the Court considered the Plaintiff’s two claims for breach of the implied covenant of good faith and fair dealing and bad faith failure to settle together, as they share the same elements. See Michael Borovsky Goldsmith LLC v. Jewelers Mut. Ins. Co., 359 F. Supp. 3d 306, 315 (E.D.N.C. 2019). The Court found the Plaintiff forecasted sufficient evidence that the Defendant refused in bad faith to settle claims against the Debtor for the policy limit when presented with the opportunity to do so, but the evidence could also support a finding that there was a reasonable, good-faith basis for not accepting certain settlement offers. The Court found there were also genuine issues of material fact as to the aggravated conduct element of the claims. Thus, the Court denied both summary judgment motions with respect to these claims.

               Fourth, the Court granted summary judgment for the Defendant on the negligence and gross negligence claims, determining that the negligent conduct cited by the Plaintiff related entirely to the Defendant’s performance under the Policy and, under the “economic loss rule,” could not support the claim. See Wilkie Amica Mut. Ins. Co., No. 1:17CV314, 2018 WL 2326130, at *3 (W.D.N.C. Apr. 30, 2018). 

               Lastly, the Court determined that the Plaintiff’s claims were non-core proceedings related to the underlying bankruptcy case under 28 U.S.C. § 157(c) and that the Court had authority to issue a final order because of the Defendant’s implied consent. The Court found that the Defendant’s post-judgment conduct and that of the counsel it retained on the Debtor’s behalf, including facilitating the Debtor’s bankruptcy filing, was indicative of the knowing and voluntary consent described in Wellness Int’l Network Ltd. v. Sharif, 575 U.S. 665, 686 (2015). 

UCC & other State Law Issues, Published No
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