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American Manufacturers Mutual Insurance Co. v. Morgan12/4/2001
r of law, from such conduct when interpreting the term "accident" if the policy fails to define it.
IV. Personal Catastrophe Liability Endorsement
Defendant argues that either the 1995-1996 or the 1996-1997 PCL Endorsement requires plaintiffs to defend and indemnify defendant in the underlying action. We disagree.
Generally an "insurer's duty to defend the insured is broader than its obligation to pay damages . . . ." Waste Management v. Peerless Ins. Co., 315 N.C. 688, 691, 340 S.E.2d 374, 377 (1986). "An insurer's duty to defend is ordinarily measured by the facts as alleged in the pleadings; its duty to pay is measured by the facts ultimately determined at trial." Id.; see also Strickland v. Hughes, 273 N.C. 481, 487, 160 S.E.2d 313, 318 (1968) (an obligation to defend becomes absolute when the allegations in the complaint bring the claim within the coverage of the policy). "Conversely, when the pleadings allege facts indicating that the event in question is not covered, and the insurer has no knowledge that the facts are otherwise, then it is not bound to defend." Waste Management, 315 N.C. at 691, 340 S.E.2d at 377.
A. 1995-1996 PCL Endorsement
Defendant argues that the 1995-1996 ("95-96") PCL Endorsement's definition of "personal injury " includes the injuries that Martha alleged, and under North Carolina's "comparison test" her allegations satisfy the coverage provisions thereby necessitating a duty to defend and indemnity by plaintiffs. See e.g Waste Management, 315 N.C. at 693, 340 S.E.2d at 378.
Defendant's 95-96 PCL Endorsement provides coverage for "personal injury ." The policy defines "personal injury" as:
Bodily injury , sickness, disease, death, disability, shock, mental anguish and mental injury;
False arrest, false imprisonment, wrongful entry, wrongful eviction, wrongful detention, malicious prosecution or humiliation;
Libel, slander, defamation of character, or invasion of privacy;
Assault and battery not committed or directed by a covered person.
The 95-96 policy was effective from 14 November 1995 to 14 November 1996. The trial court found that " he allegations in the complaint . . . establish that Martha Glidewell had no knowledge of this affair until sometime in 1997." It also found that the complaint provided no basis to determine when the alleged injuries occurred. After review of the entire record, we conclude that there was competent evidence supporting the trial court's finding of fact that Martha's injuries did not occur, and that Martha's complaint did not allege that her injuries occurred, during the 95-96 PCL Endorsement period. This finding supports the trial court's conclusion of law that plaintiffs had no duty to defend or indemnify defendant under the 95-96 PCL Endorsement policy.
Defendant also contends that the 95-96 policy remained in effect because plaintiffs never gave defendant valid notice of any reduction in coverage in the renewal of the 1996-1997 ("96-97") PCL Endorsement policy. Despite defendant's argument, we find that the record contains sufficient evidence that plaintiffs communicated valid legal notice to defendant. We hold that the defendant's alleged injury , as pled and as supported by the evidence, occurred after the expiration of the 95-96 PCL Endorsement policy, and that plaintiffs had no duty to defend or indemnify defendant under that policy.
B. 1996-1997 PCL Endorsement
Defendant additionally contends plaintiffs had a duty to defend under the 96-97 PCL Endorsement policy arguing that Martha's complaint allege "bodily injury" as defined by that endorsement. Defendant's
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