INSURANCE-RELATED COURT CASES
Digested from case reports published online
COURT DECISIONS
What does “cancellation” mean?
Nhiem Tran and Nung Ha had a fire insurance policy with Nationwide General Insurance Company. Nationwide canceled the policy because of property hazards, including an unfenced swimming pool, an unsecured trampoline, and rotting wood.
Nationwide mailed a cancellation notice on May 22, 2015, and terminated the policy on June 6, 2015. Tran and Ha claimed they never received the cancellation letter but did receive, sign, and cash a refund check for the excess premium over a month before their house burned down on July 24, 2015. Nationwide denied their claim, and they sued.
The Superior Court of Wake County found that Nationwide had properly canceled the policy by mailing the cancellation notice, thus satisfying statutory requirements. The court of appeals reversed, holding that the statute required actual receipt of the cancellation notice.
Nationwide appealed, and the Supreme Court of North Carolina remanded the case to determine the applicable statute. On remand, the trial court again ruled in favor of Nationwide and the court of appeals affirmed, stating that proof of mailing was sufficient for cancellation.
The court of appeals reversed and stated that furnishing notice as required by statute entails more than mere proof of mailing. Reasoning that the statute demands “actual delivery to and/or receipt” of a cancellation notice, the court reversed and remanded the trial court’s judgment.
The Supreme Court of North Carolina reviewed the case and affirmed the court of appeals’ decision but on different grounds. The court held that Tran and Ha had actual notice of the cancellation because of several factors: their prior knowledge of property hazards, receipt and cashing of the refund check, and the cessation of monthly premium withdrawals.
The court emphasized that actual notice was sufficient to meet statutory requirements, making the manner of giving notice secondary. Therefore, Nationwide effectively canceled the policy before the fire, and the judgment for Nationwide was affirmed.
On remand to the trial court, Tran and Ha argued that a statute called the “standard fire insurance policy” supplied the governing law. A subsection of the statute allows an insurer to end a policy “by giving to the insured a five days’ written notice of cancellation.” In Tran and Ha’s view, that provision requires actual receipt of notice.
The court held that Nationwide gave Tran and Ha the timely forewarning required by the subsection. Because Nationwide canceled the insureds’ coverage well before July 24, 2015, their policy was not in place at the time of the fire.
The court of appeals correctly affirmed the trial court’s judgment for Nationwide, although it did so by construing the statute rather than consulting the evidence. The trial court thus affirmed the court of appeals but modified its opinion to focus on the “fact of notice” rather than the “manner of giving notice.”
Ha and Tran v. Nationwide General Insurance Company—Supreme Court of North Carolina —No. 312A19-2—August 23, 2024.
