The fertile “selection/rejection” field sowed by the 2005 North Carolina Court of Appeals’ decision Williams v. Nationwide has given rise to yet another decision from that court. As has become standard in the post-Williams era, the insured in North Carolina Farm Bureau v. Jenkins argued that a missing selection/rejection form required a finding of $1 million in UIM coverage. In this instance, the Court of Appeals disagreed and affirmed the trial court’s entry of summary judgment in favor of the insurer.
At the time of the accident, the insured, Mitchell Jenkins, was riding as a passenger in his own Toyota vehicle, which was driven by his brother, Jamie Jenkins. Mitchell’s Toyota was covered by a Farm Bureau policy providing liability limits of $50,000/$100,000. Jamie and his wife, Sharon, had their own, separate Farm Bureau policy that also had liability limits of $50,000/$100,000. Farm Bureau offered to pay Jamie a total of $100,000 – $50,000 based on the liability coverage provided in his own policy, and another $50,000 based on the liability coverage in Mitchell and Sharon’s policy.
Mitchell contended that his damages exceeded the $100,000 tendered by Farm Bureau, and he attempted to make a UIM claim. Farm Bureau contended, however, that there was no UIM coverage available under either Mitchell’s policy or Jamie and Sharon’s policy. Mitchell’s policy provided UIM coverage in the amount of only $50,000 per person – less than the $100,000 Farm Bureau had already offered. Mitchell argued, however, that he was entitled to up to $1 million in UIM coverage under Jamie and Sharon’s policy because Farm Bureau could not produce a valid selection/rejection form.
Mitchell was correct that Farm Bureau could not produce a valid selection/rejection form, but Farm Bureau denied that the missing form necessitated a finding of $1 million in UIM coverage under the applicable case law. To support its argument, Farm Bureau relied in part on evidence indicating that it was the company’s routine business practice to obtain selection/rejection forms from insureds as part of the application process. In addition, Farm Bureau submitted the affidavit of Sharon Jenkins. Mrs. Jenkins’ affidavit provided:
I chose uninsured motorists coverage in the amount of $50,000 for each person, and $100,000 for each accident. I chose not to purchase underinsured motorists coverage. I cannot remember whether I signed a Selection/Rejection form . . . . It is possible that I signed one. I simply do not remember one way or the other. I understood then and I understand now that I can purchase uninsured motorists coverage or combined uninsured/underinsured motorists coverage in various amounts up to $1,000,000. I have renewed this same personal auto policy every six months since 1994 and I have never changed my decision to buy uninsured motorists coverage but not underinsured motorists coverage. (p. 4)
Relying on Mrs. Jenkins’ affidavit, Farm Bureau argued that Williams should not apply to the current case because, unlike the facts of the Williams case, Farm Bureau undeniably offered UIM coverage to Mrs. Jenkins, who acknowledged that she chose not to purchase it. The Court of Appeals agreed, and affirmed the trial court’s award of summary judgment in Farm Bureau’s favor.
In reaching its conclusion, the Court of Appeals walked through its recent selection/rejection decision in Burgdoff (which I wrote about here), as well as the Williams and Fortin opinions. The court observed:
Based upon Burgdoff, the dispositive issue before us is whether there is a genuine issue of material fact as to “whether defendants were given the opportunity to reject or select different UIM coverage limits.” Id. at ___, ___ S.E.2d at ___. Defendant dedicates a large portion of his brief to argument regarding why plaintiff’s employee’s affidavits regarding “routine business practices” should not be considered competent evidence; however, even if we disregard plaintiff’s employee’s affidavits, the affidavit of Ms. Jenkins, the co-policy holder, is dispositive of the question at hand. Ms. Jenkins stated in her affidavit, “I chose not to purchase underinsured motorists coverage” and I understood then and I understand now that I can purchase uninsured motorists coverage or combined uninsured/underinsured motorists coverage in various amounts up to $1,000,000. I have renewed this same personal auto policy every six months since 1994 and I have never changed my decision to buy uninsured motorists coverage but not underinsured motorists coverage. This evidence alone establishes Ms. Jenkins was “given the opportunity to reject or select different UIM coverage limits.” Id. at ___, ___ S.E.2d at ___. Her affidavit shows that she was aware of her options as to uninsured/underinsured motorist coverage and that she made a conscious decision not to purchase UIM coverage. Accordingly, Williams does not control this case, see id. at ___, ___ S.E.2d at ___, and summary judgment was properly allowed in favor of plaintiff. Despite the lack of the selection/rejection form, there is no dispute that Ms. Jenkins had the opportunity to reject or select different UIM coverage limits, so plaintiff is entitled to the relief requested, “a declaratory judgment that defendant is not entitled to any UIM coverage regarding the 11/04/2006 accident[.]” (pp. 9-10)
In Jenkins, the Court of Appeals has helped further define the limits of its holding in Williams. In so doing, the Court of Appeals has shown that failure to produce a valid, signed, Rate Bureau-approved selection/rejection form will not always result in a finding of $1 million in UM/UIM coverage. Further, in appropriate cases, the insurer will be entitled to summary judgment even in the absence of such a form. That being said, the burden on the insurer to produce evidence that the insured was offered the ability to select or reject UM/UIM coverage remains high. Indeed, in Jenkins, Farm Bureau won summary judgment only after submitting sworn testimony from the insured herself admitting that she expressly rejected the UIM coverage sought by her brother-in-law.
Although the court found in favor of Farm Bureau, the Jenkins decision highlights one of the practical difficulties posed by Williams. Mrs. Jenkins applied for Farm Bureau coverage sometime in 1994 - a good twelve years prior to the auto accident at issue. As a result of Williams, Farm Bureau faced the prospect of being on the hook for up to $1 million in UIM coverage due to its inability to produce a twelve year old selection/rejection form. This was true despite administrative code regulations that only require insurers and agents to maintain underwriting materials for three years. 11 NCAC 19.0102. Farm Bureau was saved in this instance largely by Mrs. Jenkins' honesty, but other insureds with missing twelve year old selection/rejection forms may not be so honest in the future. Thus, even though Farm Bureau was able to prevail in Jenkins, auto insurers will continue to face practical difficulties to avoid facing up to $1 million in UM/UIM coverage under Williams.