Signed, sealed, and delivered?
On or about April 1, 2015, Nhiem Tran contacted Nationwide General Insurance Company to secure a homeowners policy for the residence occupied by himself and Nhung Ha. Nationwide issued the policy that same day.
On or about April 14, 2015, Nationwide’s underwriting department sent an inspector to the home. The inspector issued a report on April 25, 2015, that identified several hazards he discovered at the home: (1) rotten siding, (2) an unsecured trampoline, and (3) an unfenced in-ground pool. Based on this report, Nationwide decided to cancel the policy. The underwriter who made this decision asked another Nationwide employee to prepare a notice canceling the policy. This employee drafted the letter and sent a memo to the insureds’ agent regarding the cancellation. The letter of cancellation listed the hazards identified by the inspector as the reason for the cancellation and explained the specific steps the insureds could take to ameliorate the hazards to reinstate coverage. The letter, dated May 22, 2015, gave the insureds until June 6, 2015, to address the hazards. If they did not, Nationwide would cancel the policy at 12:01 a.m. on June 6.
The certificate of mail report maintained by Nationwide showed that the cancellation letter was presented for mailing on May 22, 2015. Although the letter was not returned to Nationwide, the insureds claimed they never received it.
On July 24, 2015, a fire destroyed the residence. When Tran and Ha contacted Nationwide to file a claim, they were informed that they were not insured because the policy had been canceled. Tran and Ha then pursued a claim for reimbursement, which Nationwide denied by letter on October 1, 2015.
On January 24, 2017, Tran and Ha filed a complaint against Nationwide, seeking damages for breach of contract and a declaratory judgment that Nationwide did not timely and properly cancel the policy. Nationwide asserted a counterclaim requesting a declaratory judgment that it properly canceled the policy.
On August 31, 2018, the court dis-missed the breach of contract claim and declared that Nationwide had no duty or obligation under the policy to reimburse Tran and Ha for the damage to the residence and its contents that resulted from the fire, on the grounds that the policy was timely and properly canceled. The court taxed the costs of the action to Tran and Ha, and they appealed.
On appeal, Tran and Ha argued that the trial court erred by concluding that Nationwide complied with (1) a state law that sets conditions for policy cancellation and (2) the policy’s termination requirements. They contended that the court erred by concluding that proof of mailing provided sufficient notice of cancellation under a subsection of the law. Instead, they argued, the subsection’s use of the statutory term “furnishing” required actual delivery to and/or receipt of the notice by the insured.
The appellate court agreed, stating that the statute is remedial and is intended to protect insureds from in-term policy cancellation without notice. According to the court, the subsection’s requirement that the insurer “furnish” notice of cancellation must mean something more than “proof of mailing.” Therefore the court construed the statute in favor of granting coverage.
The trial court’s judgment was reversed, and the case was remanded for the trial court to consider the matter consistent with the appellate court’s opinion.
Nhung Ha v. Nationwide General Insurance Company—Court of Appeals of North Carolina—June 18, 2019—No. COA19-75.