MODERN AUTOMOTIVE NETWORK, LLC v. EASTERN ALLIANCE INSURANCE COMPANY

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

MODERN AUTOMOTIVE NETWORK, LLC )

)

Plaintiff, )

)

v. ) 1:17CV152

)

EASTERN ALLIANCE INSURANCE )

COMPANY d/b/a EASTERN ALLIANCE )

INSURANCE GROUP, EASTERN )

ADVANTAGE ASSURANCE COMPANY, )

d/b/a EASTERN ALLIANCE INSURANCE )

GROUP, and ALLIED EASTERN )

INDEMNITY COMPANY d/b/a EASTERN )

ALLIANCE INSURANCE GROUP )

)

Defendants. )

MEMORANDUM OPINION AND ORDER

Loretta C. Biggs, District Judge.

Before the Court are Defendants’ Motion for Summary Judgment, (ECF No. 32),

Plaintiff’s Motion to Strike, (ECF No. 35), and Defendants’ Motion in Limine, (ECF No. 49).

For the reasons stated below, the Court will grant Defendants’ motion for summary judgment

and motion in limine; and will grant in part and deny in part Plaintiff’s motion to strike.

I. BACKGROUND

This action arises out of an insurance dispute between Plaintiff, Modern Automotive

Network, LLC (“Modern”) and Defendants, Eastern Alliance Insurance Company (“EAIC”),

Eastern Advantage Assurance Company (“EAAC”), and Allied Eastern Indemnity Company

(“AEIC”), each individually and collectively d/b/a Eastern Alliance Insurance Group

(“Eastern”). Modern obtained a workers’ compensation insurance policy (the “Policy”) from

EAIC for the period from January 1, 2015 to January 1, 2016. (ECF No. 4-1 at 2.) Under the

Policy, EAIC had the “right and duty to defend” any claim against Modern that is covered by

the Policy. (Id. at 8.) EAIC also had “the right to investigate and settle these claims,

proceedings or suits.” (Id.) The Policy had a $250,000 deductible for each claim, and a yearly

aggregate deductible of $425,000. (Id. at 24.) The parties also entered into a Deductible

Reimbursement and Security Agreement (“Deductible Agreement”), which set out the terms

by which Eastern would pay for the claims and Modern would reimburse Eastern for the

deductible amount. (See ECF No. 4-2.) Modern’s claims in this lawsuit arise out of Eastern’s

handling of three workers’ compensation claims: “Mr. G,” “Mr. H,” and “Mr. S.” (See ECF

No. 4.)

Because all final settlements of any workers’ compensation claims must be approved

by the North Carolina Industrial Commission,1 Eastern hired a North Carolina law firm,

McAngus Goudelock & Courie (“McAngus”), to draft the settlement agreement for Mr. H’s

claim and to obtain approval from the Industrial Commission for the settlement of that claim.

(See ECF No. 33-2 ¶ 3.) Eastern also engaged McAngus to handle some portion of Mr. S’s

claim.2 (See ECF No. 39-3 at 17, 24.) After the settlements for these claims had been finalized,

Modern, on September 30, 2016, asked McAngus to provide it copies of the file for Mr. H’s

claim, (ECF No. 39-4 at 20), and later requested copies of Mr. S’s file, (ECF No. 39 at 20–21;

ECF No. 39-4 at 5). Modern also requested that Eastern provide its files on all three claims.

1 See N.C. Gen. Stat. § 97-17.

2 It was unclear from the record whether McAngus handled part of Mr. G’s claim.

(ECF No. 39-4 at 21.) The files appear to have been provided to Modern sometime between

January 12, 2017 and March 3, 2017. (See id. (Modern requesting all three files) and id. at 22

(McAngus providing Mr. H’s file to Modern pursuant to a subpoena).)

Defendants now move for summary judgment on all of Plaintiff’s claims which include

state law claims of breach of contract, negligent claims handling, and unfair and deceptive

trade practices. (See ECF No. 32 at 1–2.) Because Plaintiff has moved to strike certain

evidence from consideration by this Court in resolving the summary judgment motions, the

Court will first address Plaintiff’s motion to strike. See Jarrell-Henderson v. Liberty Mut. Fire Ins.

Co., No. 2:07cv432, 2009 WL 347801, at *6 (E.D. Va. Feb. 10, 2009) (“Preliminarily, the court

must decide Plaintiff’s motion to strike the affidavit of [a witness], offered in support of

[Defendant’s] response to Plaintiff’s motion for summary judgment.”).

II. PLAINTIFF’S MOTION TO STRIKE

Plaintiff’s motion to strike seeks to have this Court strike the declarations of Thomas

A. French, (ECF No. 33-1), and Jack S. Holmes, (ECF No. 33-2). (ECF No. 35.)

A. Declaration of Thomas A. French

Thomas A. French is a Pennsylvania attorney who represented Eastern in connection

with this matter. (ECF No. 36 at 3; ECF No. 33-1 ¶¶ 2, 5.) Modern argues that the Court

should strike Mr. French’s declaration which was submitted as part of Eastern’s summary

judgment filings because he was not listed on Eastern’s initial disclosure of potential witnesses,

pursuant to Federal Rule of Civil Procedure 26(a)(1), and because he was listed as one of

Eastern’s counsel of record at the time his declaration was filed. (ECF No. 36 at 3–6.) Eastern

responds that the Court should consider French’s declaration because Modern knew that

French was “mentioned by name in its Complaint,” and further knew that “he had information

relevant and material to the lawsuit.” (ECF No. 43-2 at 2.) In addition, Eastern also argues

that French’s tardy withdrawal as counsel of record was a “good faith mistake.” (Id. at 3.)

When a party “fails to provide information or identify a witness as required by Rule

26(a) or (e), the party is not allowed to use that information or witness to supply evidence . . .

at a trial, unless the failure was substantially justified or is harmless.” Fed. R. Civ. P. 37(c)(1).

Rule 37(c)(1) provides trial courts wide discretion to remedy violations of Rule 26(a) or Rule

26(e). See id. In exercising its “broad discretion,” a trial court may determine whether a party’s

violation of Rule 26(a) was “substantially justified or harmless” by considering:

(1) the surprise to the party against whom the evidence would be

offered; (2) the ability of that party to cure the surprise; (3) the

extent to which allowing the evidence would disrupt the trial; (4)

the importance of the evidence; and (5) the nondisclosing party’s

explanation for its failure to disclose the evidence.

S. States Rack & Fixture, Inc. v. Sherwin-Williams Co., 318 F.3d 592, 597 (4th Cir. 2003).

Considering the factors outlined by the Fourth Circuit, Eastern’s failure to list Mr.

French as a potential witness does not appear to be “substantially justified or harmless.” See

S. States, 318 F.3d at 597. Modern’s claim that it was surprised when Mr. French’s declaration

was submitted as a part of Eastern’s summary judgment filings, (ECF No. 36 at 4), was

reasonable since French at the time of the filing remained counsel of record and as such could

not, consistent with Rules of Professional Conduct, also serve as a witness in the case.3 See

N.C. Rules of Prof’l Conduct 3.7(a) (attorneys are not allowed to serve as witnesses in a trial

3 All attorneys practicing before the Middle District of North Carolina are required to comply with

the North Carolina Rules of Professional Conduct. L.R. 83.10e(b).

in which they are also an advocate). Further, when Modern reached out to Eastern’s counsel

in September 2018—weeks before Mr. French submitted his declaration—to determine

whether Eastern intended to call French as a witness, Eastern failed to respond. (ECF No.

35-4 at 2, 5.) Modern has thus shown that it was substantially surprised when Eastern filed

the French declaration while he remained counsel of record. In addition, Modern has shown

that it was harmed by Eastern’s failure to comply with Rule 26, which caused it to lose the

opportunity to depose Mr. French. (See ECF No. 46 at 1–2.) Further, Eastern’s “explanation

for its failure to disclose” Mr. French as a potential witness in its Rule 26 disclosures is not

persuasive. See S. States, 318 F.3d at 597; (see ECF No. 43 at 2–3). Nor can this Court conclude

that Mr. French remaining as counsel of record until after the declaration was filed, was merely

a “good faith mistake.” (See ECF No. 43 at 3.)

This Court, having determined that Modern has demonstrated that Eastern’s violation

of Rule 26(a) in this instance was neither justified nor harmless will, in its discretion, strike the

declaration of Thomas A. French, (ECF No. 33-1).

B. Declaration of Jack S. Holmes

Modern next argues that the Court should strike the declaration of Jack Holmes, (ECF

No. 33-2). (ECF No. 35 at 1.) Mr. Holmes was an attorney at McAngus who handled Mr.

H’s claim before the Industrial Commission. (ECF No. 33-2 ¶¶ 2–3.) Although Mr. Holmes

was listed in both parties’ initial disclosures of potential witnesses, (ECF No. 35-3 at 4; ECF

No. 43 at 3), Modern argues that Mr. Holmes, in his declaration, provided expert testimony,

which was not disclosed. (ECF No. 36 at 10–11.) Eastern argues in response that Mr.

Holmes’s testimony was not expert testimony because it was “based on his personal

experience and involvement with Mr. H’s claim.” (ECF No. 43 at 4.)

Federal Rule of Evidence 702 governs testimony by expert witnesses that is based on

“scientific, technical, or other specialized knowledge.” Fed. R. Evid. 702(a). Rule 701,

however, allows a lay witness to give opinion testimony that is “rationally based on the

witness’s perception” and helpful to determining a fact in issue, so long as it is not based on

the same “scientific, technical, or other specialized knowledge” covered by Rule 702. Fed. R.

Evid. 701. “And while the line between the two . . . can be ‘a fine one,’ the key to Rule 701

lay opinion testimony is that it must arise from the personal knowledge or firsthand perception

of the witness.” Lord & Taylor, LLC v. White Flint, L.P., 849 F.3d 567, 575 (4th Cir. 2017)

(quoting United States v. Perkins, 470 F.3d 150, 155 (4th Cir. 2006)). For example, in MCI

Telecommunications Corp. v. Wanzer, the Fourth Circuit held that a bookkeeper should be allowed

to testify regarding a projection of profits that she prepared “predicated on her personal

knowledge and perception.” 897 F.2d 703, 706 (4th Cir. 1990); see also Bluiett v. Pierre M. Sprey,

Inc., No. AW-05-1244, 2009 WL 10685350, at *4 (D. Md. Jan. 27, 2009) (“[W]itnesses with

technical or other specialized knowledge can provide testimony under Rule 701 under

circumstances where the testimony is directly related to the factual matter before the Court

and not based on expertise.”).

Mr. Holmes, in his declaration, stated that he reviewed Mr. H’s file, including his

medical records and other materials sent by Mr. Berger, Eastern’s adjuster, for the purpose of

preparing his filing for the Industrial Commission. (ECF No. 33-2 ¶¶ 4–6.) He also recounts

his “experience of more than 30 years practicing worker’s compensation law,” in which he had

“seen mutually-agreed to settlements by unrepresented claimants,” such as Mr. H, rejected by

the Industrial Commission. (Id. ¶ 7.) Mr. Holmes then states that, after reviewing Mr. H’s

file in conjunction with his work before the Industrial Commission, he “did not think that a

$200,000 settlement for Mr. H’s claim was unreasonable.” (Id. ¶ 8.) Mr. Holmes continues by

stating what actions he would have taken if he thought the settlement was unreasonably low

or too high. (Id. ¶¶ 9–10.)

Mr. Holmes only testifies as to his opinions that were formed as part of his handling

of Mr. H’s case before the Industrial Commission, because it is “part of [his] job to review the

file and identify any issues” regarding the reasonability of the settlement. (ECF No. 33-2 ¶ 6.)

Therefore, Mr. Holmes’s declaration testimony is based on his “personal knowledge and

perception” of his experience in handling Mr. H’s case. See MCI Telecomms., 897 F.2d at 706.

Because Mr. Holmes’s declaration offers lay witness opinion testimony pursuant to Rule 701,

Eastern did not err by not designating him as an “expert” on their initial Rule 26 disclosures.

See Indem. Ins. Co. of N. Am. v. Am. Eurocopter LLC, 227 F.R.D. 421, 423 n.2 (M.D.N.C. 2005)

(“The failure to identify a witness as an expert does not preclude the witness from testifying

as a lay witness.”). Accordingly, the Court will not strike the declaration of Jack Holmes.

Modern’s motion to strike is therefore granted in part, as it relates to the declaration of

Thomas French, (ECF No. 33-1), and denied in part, as it relates to the declaration of Jack

Holmes, (ECF No. 33-2).

III. EASTERN’S MOTION IN LIMINE4

Eastern moves to exclude the testimony and report of William Senter, Modern’s expert

witness regarding the handling of Mr. H’s claim, arguing that his report and testimony “are

insufficiently reliable and are based on improper methodologies, ipse dixit, personal opinions,

and the selective application of facts to the exclusion of contrary facts.” (ECF No. 49 at 1–

2.) Modern asserts that Mr. Senter is “phenomenally qualified” and that Eastern’s arguments

regarding Mr. Senter’s reliability are more appropriate for cross-examination. (ECF No. 57 at

2–3,11.)

Federal Rule of Evidence 702 requires the trial judge to “ensure that any and all

scientific testimony or evidence admitted is not only relevant, but reliable.” Daubert v. Merrell

Dow Pharms., Inc., 509 U.S. 579, 589 (1993). This “gatekeeping” obligation applies to all expert

testimony under Rule 702, and not just the scientific testimony at issue in Daubert. See Kumho

Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 148 (1999). The judge’s evaluation of whether expert

testimony is admissible under Rule 702 is “a flexible one,” and the judge is given “broad

discretion” in the determination of whether an expert’s testimony is reliable. See Oglesby v. Gen.

Motors Corp., 190 F.3d 244, 250 (4th Cir. 1999); see also Kumho Tire, 526 U.S. at 152. “The

proponent of the testimony must establish its admissibility by a preponderance of proof.”

Cooper v. Smith & Nephew, Inc., 259 F.3d 194, 199 (4th Cir. 2001) (citing Daubert, 509 U.S. at

592 n.10).

4 The Court recognizes that a Motion in Limine is generally reserved for trial; however, in the interest

of justice and judicial economy, the motion, which has been fully briefed by the parties, will be

addressed at this time.

“[W]here an expert relies on his experience and training and not a particular

methodology to reach his conclusions, application of the Daubert analysis is unwarranted.”

Freeman v. Case Corp., 118 F.3d 1011, 1016 n. 6 (4th Cir. 1997) (internal quotation marks and

brackets omitted); see also Kumho Tire, 526 U.S. at 141 (“Daubert’s list of specific factors neither

necessarily nor exclusively applies to all experts or in every case.”). “Experiential expert

testimony . . . does not rely on anything like a scientific method” and thus its admissibility is

not tied necessarily to its scientific testability. United States v. Wilson, 484 F.3d 267, 274 (4th

Cir. 2007) (internal quotation marks omitted). When addressing an expert whose methodology

is grounded in experience, courts use three factors: “1) how the expert’s experience leads to

the conclusion reached; 2) why that experience is a sufficient basis for the opinion; and 3) how

that experience is reliably applied to the facts of the case.” SAS Inst., Inc. v. World Programming

Ltd., 125 F. Supp. 3d 579, 589 (E.D.N.C. 2015); see also Wilson, 484 F.3d at 274.

William Senter is an attorney whose “primary areas of practice include plaintiff’s

workers’ compensation, personal injury, mediations, and arbitration.” (ECF No. 50-1 at 2.)

Mr. Senter has practiced law in North Carolina since 1975 and has “mediated in excess of

5,000 cases as a plaintiff’s attorney or a mediator,” with a majority of those cases being

workers’ compensation cases. (Id.) He has represented “[p]robably” more than a hundred

plaintiffs who had spine and neck injuries. (ECF No. 33-4 at 13.) Mr. Senter has not, however,

“ever filed or defended an insurance bad faith case” and does not claim to be an expert in

insurance claims handling. (Id. at 9.) He also does not claim to be an expert in “medical cost

projecting.” (See id. at 7–8.)

Mr. Senter’s report offers opinions, according to Modern, “solely related to claim

valuation and the Industrial Commission’s approval process.” (ECF No. 57 at 3–4.) The

report states Mr. Senter’s opinion is that “[a] reasonable settlement range for Mr. H’s claim

was between $75,000 to $125,000.” (ECF No. 50-1 at 1.) The report further reasons that Mr.

Berger’s5 initial estimate of Eastern’s “total exposure at $414,470.50 was unrealistically high”

and that “Mr. Berger’s settlement strategy was not designed to obtain the lowest settlement.”

(Id.) The report concludes by stating that the “Industrial Commission rarely denies the

approval of a submitted [settlement]” and that “[t]here [is] no harm to a future settlement in a

case if the [Industrial Commission] rejects the initial propose[d] [settlement].” (Id.)

Eastern argues that Mr. Senter’s report and testimony should be excluded “[b]ased on

[his] lack of experience or knowledge about the handling of pro se claims, lack of experience

in evaluating or forecasting medical costs,” as well as his admissions that he is not an expert

in insurance claims handling, medical forecasting, or insurance bad faith. (ECF No. 60 at 2-

3.) This Court agrees.

While Mr. Senter makes it clear that he is not an expert on insurance claims handling,

much of his discussion concerning Eastern’s valuation of Mr. H’s claim involves many of the

nuances of claims handling. (Id. at 3.) In explaining his conclusion that Mr. Berger’s valuation

of Mr. H’s claim was too high, Mr. Senter suggests, among other opinions, that: (1) Mr. Berger

should have looked into Mr. H’s prior medical history or pre-existing conditions to see

whether the claim was compensable, or attributable to his on-the-job injury, (ECF No. 33-4

at 24–26); (2) Mr. H’s intention not to get the recommended spinal surgery right away should

5 Eastern’s claim adjuster.

have lowered the settlement amount, (id. at 35–36); (3) Mr. H appeared motivated to settle the

case, which could have led to a lower settlement amount, (id. at 39–40); and (4) Eastern should

have “doctor shopped” to find a medical opinion that Mr. H’s surgery was not needed, (id. at

45–46). Mr. Senter’s opinions on Mr. H’s claim valuation seem to be inextricably tied to his

opinions regarding the reasonableness of how Eastern handled Mr. H’s claim.6 It is therefore

unclear “how [Mr. Senter’s] experience le[d] to [certain] conclusion[s] reached” in light of his

lack of experience in insurance claim handling. See SAS Inst., 125 F. Supp. 3d at 589.

Eastern also argues that Mr. Senter’s experience cannot be reliably applied to the facts

in this case because Mr. Senter lacks any experience dealing with pro se claimants before the

Industrial Commission. (See ECF No. 60 at 2–3.) Mr. H’s pro se status is important, Eastern

argues, because “the standards the Industrial Commission . . . applies to settlements, the

timeline of settlement offers, the length of successful settlement negotiations, and other key

factors are significantly altered in relation to pro se claimants acting without the safeguards of

legal representation.” (Id. at 3.) In his deposition, Mr. Senter testified as to his lack of

experience with pro se claimants:

Q. In your experience—well you wouldn’t have any experience

representing pro se plaintiffs because they would have a lawyer.

6 Mr. Senter’s focus on the claims handling process in his conclusion regarding the final settlement

amount is best shown by this exchange in his deposition:

Q. [I]s it your opinion that Eastern’s handling was wrong? And is it

your opinion that Eastern’s settlement range was wrong?

A. My opinion is that in my experience Eastern made no effort that I

can see to settle this case for a substantially lower amount.

(ECF No. 33-4 at 89–90.)

But as a mediator have you ever mediated cases with pro se

workers?

A. I have.

Q. And did ultimately the Commission approve the settlement?

A. I don’t keep up with that.

Q. Okay.

A. When I leave mediation I’m through.

. . .

Q. Okay, but you don’t have any experience with unrepresented

parties in the [I]ndustrial [C]ommission?

A. You mean as a rate of what gets kicked back and doesn’t get

kicked back?

Q. Yeah.

A. No.

(ECF No. 33-4 at 76–77.) Mr. Senter also testified that he found it “a little unusual” that Mr.

Berger was the first to make a settlement offer, because “[y]ou usually get a demand from a

plaintiff before an adjuster makes an offer.” (Id. at 95–96.) This opinion carries less weight,

however, when considering that Mr. Senter has never been a part of a negotiation with an

unrepresented claimant. (See id. at 76–77.) Therefore, Mr. Senter’s conclusions that the

“Industrial Commission rarely denies the approval of a submitted [settlement]” and “Mr.

Berger’s settlement strategy was not designed to obtain the lowest settlement,” (ECF No. 50-

1 at 1) are not reliably based on Mr. Senter’s experience.

Moreover, Eastern argues that Mr. Senter’s deposition testimony contradicted his

opinions as stated in his expert report. (ECF No. 60 at 8–9.) Contradictory expert testimony

may be excluded due to a lack of reliability. See, e.g., Tyree v. Bos. Sci. Corp., 54 F. Supp. 3d 501,

546 (S.D.W. Va. 2014), as amended (Oct. 29, 2014); Richmond Med. Ctr. for Women v. Hicks, 301

F. Supp. 2d 499, 510 (E.D. Va. 2004), rev’d on other grounds sub nom. Richmond Med. Ctr. for Women

v. Herring, 570 F.3d 165 (4th Cir. 2009). Mr. Senter’s report states that Mr. Berger’s valuation

of Eastern’s “total exposure at $414,470.50 was unrealistically high.” (ECF No. 50-1 at 1.)

However, in his deposition, Mr. Senter states that Eastern could have “conceivably” been

exposed to $414,000 in liability “or more.” (ECF No. 33-4 at 74.) He also gives an example

of how Eastern’s exposure could be $175,000 higher than Mr. Berger’s estimated $414,470.50

in exposure, if Mr. H “doesn’t get back to work at all and they got to pay him for the rest of

the 500 weeks” following surgery. (Id. at 69.) Moreover, Mr. Senter’s inconsistent testimony

demonstrates that his opinions on valuation—a subject about which he claims expertise—are

unreliable and likely to confuse, rather than assist a finder of fact. See Fed. R. Evid. 702(a)

(explaining that expert testimony is only appropriate where it “will help the trier of fact to

understand the evidence or to determine a fact in issue”). Nor are the cases cited by Modern,

in support of its argument that this Court should allow Mr. Senter’s expert testimony,

persuasive.

In ruling on a motion to exclude the testimony of an expert witness, the trial judge is

assigned “the task of ensuring that an expert’s testimony both rests on a reliable foundation

and is relevant to the task at hand.” Daubert, 509 U.S. at 597. This Court concludes that

Modern has not shown by a preponderance of the evidence that Mr. Senter’s experience, and

therefore his proffered testimony, can be reliably applied to the facts of this case. See Wilson,

484 U.S. at 274; Cooper, 259 F.3d at 199.

The Court will therefore grant Eastern’s Motion in Limine to Exclude Testimony and

Report of William Senter, (ECF No. 49).

IV. DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

A. Standard of Review

Summary judgment is appropriate when “the movant shows that there is no genuine

dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.

R. Civ. P. 56(a). A dispute is “genuine” if the evidence would permit a reasonable jury to find

for the nonmoving party, and “[a] fact is material if it might affect the outcome” of the

litigation. Jacobs v. N.C. Admin. Office of the Courts, 780 F.3d 562, 568 (4th Cir. 2015) (internal

quotation marks omitted). The role of the court is not “to weigh the evidence and determine

the truth of the matter” but rather “to determine whether there is a genuine issue for trial.”

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). When reviewing a motion for summary

judgment, the court must view the evidence and “resolve all factual disputes and any

competing, rational inferences in the light most favorable” to the nonmoving party. Rossignol

v. Voorhaar, 316 F.3d 516, 523 (4th Cir. 2003) (quoting Wightman v. Springfield Terminal Ry. Co.,

100 F.3d 228, 230 (1st Cir. 1996)).

In cases where the nonmovant will bear the burden of proof at trial, the party seeking

summary judgment bears the initial burden of “pointing out to the district court . . . that there

is an absence of evidence to support the nonmoving party’s case.” Celotex Corp. v. Catrett, 477

U.S. 317, 325 (1986). If the moving party carries this burden, then the burden shifts to the

nonmoving party to point out “specific facts showing that there is a genuine issue for trial.”

Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (emphasis omitted)).

In so doing, “the nonmoving party must rely on more than conclusory allegations, mere

speculation, the building of one inference upon another, or the mere existence of a scintilla of

evidence.” Dash v. Mayweather, 731 F.3d 303, 311 (4th Cir. 2013). The nonmoving party must

support its assertions by citing to particular parts of the record, or by showing that the

materials cited do not establish the absence of a genuine dispute. Fed. R. Civ. P. 56(c)(1); see

Celotex, 477 U.S. at 324. The judicial inquiry on summary judgment “thus scrutinizes the

plaintiff’s case to determine whether the plaintiff has proffered sufficient proof, in the form

of admissible evidence, that could carry the burden of proof of his claim at trial.” Mitchell v.

Data Gen. Corp., 12 F.3d 1310, 1316 (4th Cir. 1993).

B. Discussion

In its Complaint, Modern states four causes of action concerning Eastern’s handling

of the claims of Mr. G, Mr. H, and Mr. S: (1) breach of contract, (ECF No. 4 ¶¶ 80–86); (2)

negligent claims handling, (id. ¶¶ 87–90); (3) unfair and deceptive trade practices pursuant to

N.C. Gen. Stat. § 58-63-15(11), (id. ¶¶ 91–100); and (4) unfair and deceptive trade practices

pursuant to N.C. Gen. Stat. § 75-1.1, (id. ¶¶ 101–107). The Court will address the above causes

of action in order, addressing the final two causes of action together.

1. Breach of Contract

a. Mr. G

Mr. G was injured in April 2015. (ECF No. 4 ¶ 20.) Modern settled Mr. G’s claim in

March 2016. (ECF No. 39-2 ¶ 6.) Although Modern had expressed its strong preference that

Eastern obtain a “release and resignation”7 as part of Mr. G’s settlement, (ECF No. 33-3 at

95–97), Eastern did not obtain a release and resignation along with its settlement of Mr. G’s

claim, (id. at 100.) The Policy does not require Eastern to obtain a release and resignation as

part of its settlement process. (Id. at 98; see ECF No. 4-1.)

Modern argues that Eastern breached the Policy by failing to obtain a release and

resignation from Mr. G as part of its settlement of his workers’ compensation claim. (ECF

No. 39 at 11–12.) Eastern argues that it was not required by the Policy to obtain a release and

resignation as part of every settlement. (ECF No. 33 at 12–13.) Modern counters that,

although the duty to obtain a release and resignation was not explicitly stated in the Policy, the

Court is permitted to consider parol evidence to interpret the Policy as requiring a release and

resignation. (ECF No. 39 at 11.)

An insurance policy is a contract, and “its provisions govern the rights and duties of

the parties thereto.” Fidelity Bankers Life Ins. Co. v. Dortch, 348 S.E.2d 794, 796 (N.C. 1986).

“As with all contracts, the goal of construction is to arrive at the intent of the parties when the

policy was issued.” Woods v. Nationwide Mut. Ins. Co., 246 S.E.2d 773, 777 (N.C. 1978). “In

construing an insurance policy, ‘nontechnical words, not defined in the policy, are to be given

the same meaning they usually receive in ordinary speech, unless the context requires

otherwise.’” Brown v. Lumbermens Mut. Cas. Co., 390 S.E.2d 150, 153 (N.C. 1990) (quoting Grant

v. Emmco Ins. Co., 243 S.E.2d 894, 897 (N.C. 1978)). Further, “ambiguity in the terms of an

7 A “release and resignation” is where, as a part of the settlement process, the employee agrees to

resign and be released from his position in exchange for a certain amount of money. (ECF No. 39-3

at 65.)

insurance policy is not established by the mere fact that the plaintiff makes a claim based upon

a construction of its language” which the insurance company disputes. Wachovia Bank & Tr.

Co. v. Westchester Fire Ins. Co., 172 S.E.2d 518, 522 (N.C. 1970). Instead, ambiguity only exists

if “the language of the policy is fairly and reasonably susceptible to either of the constructions

for which the parties contend.”8 Id. “[I]f the meaning of the policy is clear and only one

reasonable interpretation exists, the courts must enforce the contract as written.” Woods, 246

S.E.2d at 777.

Modern argues that the phrase “duty to defend” is not defined in the Policy and is

therefore ambiguous. (ECF No. 39 at 11.) An insurer’s “duty to defend,” is a common feature

of insurance contracts. See generally 3 New Appleman on Insurance Law § 17.01 et seq. (2019).

The “duty to defend” is generally understood to mean the insurance company’s duty to hire

counsel to defend the insured in a suit brought by a third-party. See Auto-Owners Ins. Co. v.

Potter, 242 F. App’x 94, 99–100 (4th Cir. 2007) (explaining that withdrawal of counsel

representing the insured may represent a breach of the duty to defend); Bruce-Terminix Co. v.

Zurich Ins. Co., 504 S.E.2d 574, 576–78 (N.C. Ct. App. 1998) (explaining that, after the

plaintiff’s insurance companies denied their duty to defend, the plaintiff had to “hire[ ] counsel

to represent its interests in” a third-party suit). The “duty to defend” ends when a settlement

or judgment is reached, unless the parties have contracted otherwise. See Brown v. Lumbermens

Mut. Cas. Co., 369 S.E.2d 367, 374 (N.C. Ct. App. 1988), aff’d, 390 S.E.2d 150, 151 (N.C. 1990)

(interpreting an ambiguous duty to defend to end upon a final settlement or judgment, not

8 “The trial court’s determination of whether the language of a contract is ambiguous is a question of

law.” Salvaggio v. New Breed Transfer Corp., 564 S.E.2d 641, 643 (N.C. Ct. App. 2002) (quoting Bicket v.

McLean Sec., Inc., 478 S.E.2d 518, 521 (N.C. Ct. App. 1996)).

once the insurer has paid out to its policy limit). Modern does not point to any other portion

of the Policy that would extend the scope of the duty to defend beyond settlement of the

claims against it and does not explain why Eastern’s “duty to defend” is ambiguous beyond

noting that the Policy does not define “defend.” (ECF No. 39 at 11–12.) This Court does

not find the “duty to defend,” as stated in the Policy, ambiguous. Because “only one

reasonable interpretation exists,” Woods, 246 S.E.2d at 777, the Court will decline to interpret

the Policy’s “duty to defend” as requiring Eastern to obtain a release and resignation with

every settlement. Further, because the language of the contract is unambiguous, the parol

evidence rule prevents the Court from considering the statements made during the negotiation

of the Policy in which Modern contends that it expressed its desire to “always” secure a

resignation and release. See Thompson v. First Citizens Bank & Tr. Co., 567 S.E.2d 184, 188 (N.C.

Ct. App. 2002); (ECF No. 39-1 at 6–8). Accordingly, because Modern has failed to show that

a genuine issue of material fact exists regarding Eastern’s handling of Mr. G’s claim, Eastern

is entitled to summary judgment as a matter of law as to Modern’s breach of contract claim

regarding Mr. G’s claim.

b. Mr. H

Mr. H suffered a spinal injury in October 2015. (See ECF No. 4 ¶ 31; ECF No. 33-7

at 7–8.) One of the physicians that Mr. H saw recommended a spinal fusion surgery which

would force Mr. H to be out of work for four to six weeks and face a maximum total of six

months of recovery. (See ECF No. 33-7 at 7–8.) Modern and Eastern were initially prepared

to settle by paying for Mr. H’s surgery and recovery costs and allowing Mr. H to return to

work for Modern in a light-duty role. (See id. at 9.) Approximately one week before Mr. H

was scheduled to have his surgery, however, Mr. H informed Eastern that he wished to settle

for a lump sum instead. (ECF No. 33-7 at 2.)

After reviewing Mr. H’s file, Eastern’s insurance adjuster, Jeffrey Berger, estimated the

potential cost of Mr. H’s case to be approximately $414,740.50, including present and future

medical costs, vocational rehabilitation, and disability payments. (Id. at 4.) He also estimated,

“based [o]n past history,” that the North Carolina Industrial Commission would not approve

of a settlement below $200,000 for this case. (Id.) When Mr. Berger informed Modern’s

general counsel, Mike Feiereisel, that he anticipated a settlement of around $225,000, Modern

disagreed, stating that $125,000 would be a more appropriate figure. (Id.; ECF No. 33-3 at 79.)

Mr. Berger first offered Mr. H $175,000 as a settlement, and finally agreed on a settlement of

$200,000. (ECF No. 33-7 at 2–3; ECF No. 39-3 at 79–80.)

Eastern argues that it is entitled to summary judgment because it “investigated and

settled” Mr. H’s claim “within [the] policy limits,” pursuant to the terms of the Policy. (ECF

No. 33 at 11–12.) Eastern argues further that it satisfied its duty of good faith by settling the

case within the policy limits. (ECF No. 33 at 8–9.) Modern argues that Eastern breached the

Policy by “put[ting] its interests ahead of Modern’s when it settled Mr. H’s case for an

excessive amount.” (ECF No. 39 at 15 (emphasis omitted).)

“The law imposes on the insurer the duty of carrying out in good faith its contract of

insurance[,]” including the insurer’s “right to effectuate settlement.” Alford v. Textile Ins. Co.,

103 S.E.2d 8, 12 (N.C. 1958); see also Robinson v. N.C. Farm Bureau Ins. Co., 356 S.E.2d 392, 395

(N.C. Ct. App. 1987) (“An insurance company is expected to deal fairly and in good faith with

its policyholders.”). Insurance companies and their agents do not, however, “act as agents for

the insured when settling claims.” Hatcher v. Flockhart Foods, Inc., 589 S.E.2d 140, 142 (N.C.

Ct. App. 2003) (citation omitted). The North Carolina Court of Appeals has held:

that a cause of action alleging breach of good faith will not lie

when the insurer settles a claim within the monetary limits of the

insured’s policy; however, in doing so, we believe the insurer has

the duty to consider the insured’s interest. In so holding, we

recognize that an insurer may act in its own interest in settlement

of the claim.

Cash v. State Farm Mut. Auto. Ins. Co., 528 S.E.2d 372, 380 (N.C. Ct. App. 2000) (citations

omitted). Other states that have addressed this issue have similarly found that an insurer that

settles a claim within the policy limits generally acts in good faith. See Doe v. S.C. Med.

Malpractice Liab. Joint Underwriting Ass’n, 557 S.E.2d 670, 675 (S.C. 2001) (holding that an

insurance company that settled within the policy limits acted in good faith); Shuster v. S. Broward

Hosp. Dist. Physicians’ Prof’l Liab. Ins. Tr., 591 So. 2d 174, 177 (Fla. 1992) (explaining that an

insurer who settles within its policy limit does “exactly what the parties contemplated,” and so

does not act in bad faith); Marginian v. Allstate Ins. Co., 481 N.E.2d 600, 603 (Ohio 1985)

(holding that “a cause of action alleging a breach of the insurer’s duty of good faith” will not

lie where the insurer has permission to settle any claim and does so within its monetary limits).

Although North Carolina courts do consider whether a settlement is made within the policy

limits, in settling a claim, the insurer “has the duty to consider the insured’s interest.” Cash,

528 S.E.2d at 380.

Modern’s main argument against the reasonableness of Mr. H’s settlement is that

Eastern paid too much.9 Mr. Berger’s claim notes show that Mike Feiereisel, Modern’s general

9 Modern also appears to argue that Eastern was unreasonable when it denied Mr. H’s scheduled

surgery. (ECF No. 39 at 15–17.) Although Mr. Berger did withdraw Eastern’s approval for Mr. H’s

counsel, believed that $125,000 was an appropriate settlement amount, (ECF No. 33-7 at 4–

5), and Mr. Feiereisel, in his deposition, states that he believed that $75,000 was an appropriate

settlement amount, (ECF No. 33-3 at 126–28). Mr. Burger, however, estimated Eastern’s total

exposure as $414,740.50 and recommended a settlement “for up to $225,000–$230,000.”

(ECF No. 33-7 at 4.) Mr. Burger also estimated that because “the injured worker is not

represented, the [Industrial] Commission would not approve a settlement on this file unless

we are paying $200,000 or more based [o]n past history.” (Id.) Jack Holmes, the North

Carolina attorney who represented Eastern before the Industrial Commission for Mr. H’s

claim, stated that “[w]hen [he] reviewed the file in this matter, . . . [he] did not think that a

$200,000 settlement for Mr. H’s claim was unreasonable.” (ECF No. 33-2 ¶ 8.) Further,

Henry C. Byrum, Jr. an expert witness proffered by Eastern, wrote in his report that a

settlement of $200,000 was “entirely reasonable.” (ECF No. 57-5 at 4.)

Modern also takes issue with the fact that, by settling Mr. H’s claim for $200,000,

Eastern spent “$200,000 of Modern’s money (entirely within Modern’s deductible)” while

“Eastern’s risk and costs were eliminated.” (ECF No. 39 at 17.) That fact alone, however,

cannot support a breach of contract claim for failure to settle Modern’s claim in good faith.

See Cash, 528 S.E.2d at 380. To avoid summary judgment, Modern must “rely on more than

conclusory allegations, mere speculation, the building of one inference upon another, or the

scheduled surgery on September 1, 2016, (ECF No. 33-7 at 2), that was in accordance with Mr. H’s

wishes, (see id. at 5). Mr. Berger only withdrew Eastern’s approval of the surgery once Mr. H expressed

his interest “in a settlement rather than go[ing] through with a 3[-]level cervical fusion [surgery]” and

the parties had agreed to a settlement of $200,000. (Id. at 2, 5.) Because Mr. H no longer wished to

undergo the surgery at that time, Modern has failed to show how Eastern breached its duty of good

faith by agreeing to a settlement and not forcing Mr. H to undergo the surgery.

mere existence of a scintilla of evidence.” See Dash, 731 F. 3d at 311. Modern has thus failed

to raise a genuine issue related to its claim that Eastern breached the Policy by failing to

consider Modern’s interest in settling Mr. H’s case for $200,000. Cash, 528 S.E.2d at 280.

Defendant is therefore entitled to judgment on this claim as a matter of law.

c. Mr. S

Mr. S was injured in February 2015, (ECF No. 4 ¶ 58), and his claim was settled in

October 2016, (see ECF No. 39-2 at 7). As part of the settlement, Modern agreed to waive its

right to a meritorious third-party negligence claim and allow Mr. S to keep those proceeds,

valued at $40,000. (ECF No. 39-2 at 7; ECF 4 ¶ 59.) In exchange, Modern was told that Mr.

S agreed to pay a required amount of $11,699 to a Medicare Set Aside fund (“MSA”).10 (ECF

No. 39-2 at 7; ECF No. 4 ¶ 59.) Modern was informed approximately two months later,

however, that the “‘payback’ situation did not work out,” and that Modern would be

responsible for over $5,000 for the MSA. (ECF No. 39-2 at 3–4, 8.) Modern was not

contacted regarding this change in Mr. S’s settlement before the bill was issued. (Id. ¶ 13.) As

a result, Modern argues that Eastern did not handle Mr. S’s claim in good faith because it

“g[a]ve away over $5,000 of Modern’s money without any communication with Modern.”

(ECF No. 39 at 15.)

10 Medicare Set Aside funds require injured workers to direct a portion of their workers’ compensation

settlement into a fund—the Set Aside fund—and further require the worker to exhaust these funds

before Medicare will pay for any future medical treatment related to their work-related injury, illness

or disease. See Worker’s Compensation Medicare Set Aside Arrangements, CMS.gov,

https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Workers-Compensation-

Medicare-Set-Aside-Arrangements/WCMSA-Overview.html (last visited Sept. 23, 2019).

Modern appears to focus its critique of Eastern’s handling of Mr. S’s claim on the lack

of communication regarding the change of settlement terms. (See ECF No. 39 at 14–15; ECF

No. 39-2 ¶ 15 (“[Mr. Feiereisel] was in the office and available during business hours from

October 16 to December 14 most days. There was nothing preventing Eastern from

communicating with [him] during those times.”).) Modern does not, however, argue or

provide support for the proposition that an insurer owes any particular duty to communicate

with its insured throughout the settlement process and update the insured on any material

changes. (See ECF No. 39.) Because there is no independent duty to communicate and update

the insured of material changes which occur during the settlement process, Eastern’s handling

of Mr. S’s settlement is judged by the same “duty to consider the insured’s interest” as was the

case in Mr. H’s claim. See Cash, 528 S.E.2d at 380.

Modern argues that Eastern failed to consider its interests when it improperly

considered the fact that Modern did not renew its policy with Eastern when settling Mr. S’s

claim. (ECF No. 39 at 15.) In support of this argument, Modern points to an email between

Robert Carl, a “Subrogation Claim Representative” from Eastern and Mr. Feiereisel. (Id.; ECF

No. 39-4 at 23.) Attached to that email, it appears that Mr. Carl wrote, in a yellow highlighted

text box, “insd no longer with EAIG.” (ECF No. 39-4 at 17–18, 23 (explaining that quote to

mean that Modern was no longer insured by Eastern).) It is not explained in the record,

however, how or why that yellow box was attached to the email or the role of Mr. Carl in Mr.

S’s settlement. Modern cannot satisfy its burden to avoid summary judgment by engaging in

“mere speculation” or “the building of one inference upon another.” Dash, 731 F.3d at 311.

Accordingly, the Court will grant Eastern’s motion for summary judgment with respect to its

breach of contract claim regarding the handling of Mr. S’s settlement.

2. Negligent Claims Handling

Eastern next seeks summary judgment related to Modern’s second cause of action for

negligent claims handling. (ECF No. 4 ¶¶ 87–90.) Modern’s claim alleges that Eastern

negligently handled Modern’s workers’ compensation claims, most importantly by refusing to

provide the insured with copies of relevant files. (See id.) Eastern argues that this claim fails

as a matter of law because Plaintiff raises no genuine issue entitling it to an exception to the

economic loss rule. (ECF No. 33 at 13–16.) Further, Eastern argues that even if this Court

concludes that the economic loss rule does not bar Modern’s claim, any negligence by

Defendants is barred due to Plaintiff’s own contributory negligence. (Id. at 16–17.) Modern

argues that an exception to the economic loss rule does apply and that “it would be improper

for the Court to grant summary judgment against Modern’s negligence claim surrounding

Eastern depriving Modern of its file from Modern’s own attorney.” (ECF No. 39 at 20–22.)

As previously recognized by this Court, the economic loss rule provides that

“[o]rdinarily, a breach of contract does not give rise to a tort action by the promisee against

the promisor.” N.C. State Ports Auth. v. Lloyd A. Fry Roofing Co., 240 S.E.2d 345, 350 (N.C.

1978), abrogated in part on other grounds by Trs. of Rowan Tech. Coll. v. J. Hyatt Hammond Assocs., Inc.,

328 S.E.2d 274 (N.C. 1985). This is true even where the failure to perform the contract is due

to the negligent or intentional conduct of the party and the injury resulting from the breach is

the subject of the contract. (See id. at 350–51.) The economic loss rule, does however, include

four exceptions under which a promisee may support a tort action against a promisor. (Id.)

Of these four exceptions only the fourth exception has potential applicability here, (ECF No.

18 at 11), which the parties each address in their respective briefs. (ECF No. 33 at 14–16;

ECF No. 39 at 20–22.) Under the fourth exception, “a promisee may sue a promisor for the

negligent performance of a contract” where such promisee can show that the injury was willful

or “a conversion of the property of the promisee, which was the subject of the contract.”

Mason v. Yontz & Sons, 403 S.E.2d 536, 538 (N.C. Ct. App. 1991); Ports Auth., 240 S.E.2d at

350–51.

Modern argues that the fourth exception to the economic loss rule applies on the facts

of this case under a conversion theory based on the allegation that EAIC refused to provide

the insured with a copy of its files and directed McAngus not to turn over the files to Modern.

(ECF No. 39 at 20–22.) While such allegations may have been sufficient to allow the claim to

survive at the motion to dismiss stage, at this stage Modern must produce sufficient evidence

that such conversion occurred; that the property converted is the property of Modern; and

that the property converted is the subject of the contract between Eastern and Modern. A

failure on any one of these elements will bar Modern’s tort claim. See Mitchell, 12 F.3d at 1316

(“The summary judgment inquiry . . . scrutinizes the plaintiff’s case to determine whether the

plaintiff has proffered sufficient proof, in the form of admissible evidence, that could carry

the burden of proof of his claim at trial.”).

Eastern argues that the fourth exception to the economic loss rule does not apply

because (1) the claim files are not the subject of the parties’ contract; (2) Defendants’

temporary retention of the files was under a claim of right and so was not wrongful and,

therefore, not conversion; and (3) Modern was contributorily negligent. (ECF No. 33 at 13–

16.)

First, Modern’s brief is completely silent on Eastern’s contention that the claim files

are not the subject of the parties’ contract. Nor does Modern address at all this element of its

claim. (See ECF No. 39 at 20–22.) The parties’ contracts in this case are the Policy and the

Deductible Agreement. Modern offers no evidence or other support to show that the claims

files sought by Modern are the “subject of the contract” between Modern and Eastern—a

requirement for its negligence claim to go forward under the fourth exception to the economic

loss rule. See Ports Auth., 240 S.E.2d at 350–51. Typically, “a party’s failure to address an issue

in its opposition brief concedes the issue.” Oliver v. Baity, 208 F. Supp. 3d 681, 690 (M.D.N.C.

2016) (collecting cases). Moreover, Modern has not provided sufficient evidence that Eastern

engaged in conversion of the claim files or directed McAngus not to turn over the files. The

North Carolina Supreme Court has held that the claim of conversion has “two essential

elements,” the “ownership in the plaintiff and wrongful possession or conversion by the

defendant.” Variety Wholesalers, Inc. v. Salem Logistics Traffic Servs., LLC, 723 S.E.2d 744, 747

(N.C. 2012). Modern points to the following evidence in the record to support its theory of

conversion by Eastern: (a) that Modern requested the claim files of Mr. H and Mr. S from

both McAngus and Eastern, (ECF No. 39 at 20–21); (b) that Modern did not receive the files

in question from McAngus until approximately five months after its initial request, on

September 30, 2016 and then only once it had filed this suit, (id.); (c) that following Modern’s

initial request for the files from McAngus, conversations transpired between McAngus and

Eastern though Modern was not able to show the contents of this conversation, (id at 21); (d)

that a conversation between Eastern and Eastern’s Pennsylvania attorney on December 14,

2016 about privilege related to the files, (id.); and (e) that Eastern eventually made a statement

that it did not oppose Modern receiving the files, although it did not know when it reached

that conclusion, (id.). Based on this evidence Modern argues that Eastern depriving Modern

of its attorney files, in violation of Rule 245 of the North Carolina Rules of Professional

Conduct,11 is wrongful and therefore is conversion. (ECF No. 39 at 22.) This argument fails

for two reasons. First, Modern’s evidence is not sufficient to show that Eastern deprived

Modern of its attorney files. Second, Rule 245 cited by Modern may impose a duty upon an

attorney; however, Modern has failed to demonstrate that that it imposes such a duty on

Eastern, thus making Eastern’s actions wrongful.

Taking the evidence pointed to by Modern in the light most favorable to Modern and

resolving all inferences in its favor, Modern has failed to point to sufficient evidence in the

record for a reasonable juror to find that Eastern has engaged in conversion of the files in

question. See Mitchell, 12 F.3d at 1316. Thus, Modern, having failed to establish two essential

components of the fourth exception to the economic loss rule, the rule applies, and Modern’s

negligent mishandling claim is barred.

Accordingly, Eastern is entitled to judgment as a matter of law and thus its motion for

summary judgment related to Modern’s second cause of action for negligent claims

mishandling will be granted.

11 The rule provides in pertinent part: “A lawyer in possession of the legal file relating to the prior

representation of co-parties in an action must provide the co-party the lawyer does not represent with

access to the file and a reasonable opportunity to copy the contents of the file.” N.C. R. Prof’l

Conduct 245.

3. Unfair and Deceptive Trade Practices pursuant to N.C. Gen. Stat. §§ 58-63-15(11), 75-

1.1

Modern’s third and fourth causes of action are unfair and deceptive trade practices

claims. (ECF No. 4 ¶¶ 91–107.) The third cause of action is alleged pursuant to sections 58-

63-15(11) and 75-1.1 of the North Carolina General Statutes, and the fourth cause of action

is alleged solely pursuant to section 75-1.1. (Id.) To state a prima facie claim for unfair or

deceptive trade practices pursuant to section 75-1.1, “a plaintiff must show: (1) [the] defendant

committed an unfair or deceptive act or practice, (2) the action in question was in or affecting

commerce, and (3) the act proximately caused injury to the plaintiff.” Bumpers v. Cmty. Bank of

N. Va., 747 S.E.2d 220, 226 (N.C. 2013) (alteration in original) (quoting Dalton v. Camp, 548

S.E.2d 704, 711 (N.C. 2001)). Section 58-63-15 of the North Carolina General Statutes

enumerates certain practices “as unfair methods of competition and unfair and deceptive acts

or practices in the business of insurance.” N.C. Gen. Stat. § 58-63-15. North Carolina courts

have held that these practices enumerated in § 58-63-15(11) are “unfair or deceptive acts or

practices,” which are prohibited under § 75-1.1(a). Gray v. N.C. Ins. Underwriting Ass’n, 529

S.E.2d 676, 683 (N.C. 2000); Country Club of Johnston Cty., Inc. v. U.S. Fid. & Guar. Co., 563

S.E.2d 269, 279 (N.C. Ct. App. 2002). Thus, North Carolina law extends a private right of

action to an insured whose insurer has committed a prohibited practice enumerated in § 58-

63-15(11). See, e.g., Country Club of Johnston Cty., 563 S.E.2d at 279–80.

With respect to Mr. G’s claim, Modern argues that Eastern’s failure to notify Modern

when it agreed to a settlement violated sections 58-63-15(11)(b) and 75-1.1.12 (ECF No. 39 at

12 Modern also argues that “Eastern . . . violated [section] 58-63-15(1) when it misrepresented that it

would obtain releases and resignations in connection with settlements.” (ECF No. 39 at 14.) Modern

13.) Eastern’s claim notes show that Eastern and Mr. G agreed to a settlement on February

29, 2016. (ECF No. 39-2 at 5.) On March 11, 2016, an Eastern representative left a voicemail

with Mr. Feiereisel “to advise that [Mr. G’s claim] is moving forward for settlement.” (Id.)

The settlement was then submitted to the Industrial Commission on March 29, 2016. (Id.)

One and a half months later, on May 17, 2016, Mr. Feiereisel emailed Eastern when he noticed

a “large charge on this month’s statement for [Mr. G]” and asked whether the claim had

settled. (Id. at 6.) A representative from Eastern replied within twenty minutes to say that it

had settled, the amount it settled for, and the type of settlement. (Id.)

Modern argues that this conduct shows that Eastern violated section 58-63-15(11)(b),

which prohibits an insurance company from “failing to acknowledge and act reasonably

promptly upon communications with respect to claims arising under insurance policies.” N.C.

Gen. Stat. § 58-63-15(11)(b). Modern does not, however, point to any “communications” to

which Eastern “[f]ail[ed] to acknowledge and act reasonably promptly.” Id.; (ECF No. 39 at

12–13). Instead, Modern appears to interpret the statute as creating a duty for the insurer to

provide the insured with periodic updates throughout the settlement process. (ECF No. 39

at 12–13.) Modern does not point to, and this Court does not find, any authority creating

such a duty for Eastern. Modern has therefore failed to point to sufficient facts in the record

to show a violation of subsection (b).

does not, however, plead a cause of action arising under subsection (1) in its Complaint. (See ECF

No. 4 ¶¶ 91–100 (citing N.C. Gen. Stat. §§ 58-63-15(11) and 75-1.1).) Because “a party may not use

its briefs in support of or opposition to summary judgment to amend a complaint,” Hexion Specialty

Chems., Inc. v. Oak-Bark Corp., No. 7:09-CV-105-D, 2011 WL 4527382, at *7 (E.D.N.C. Sept. 28, 2011),

the Court will not consider Modern’s attempted claim pursuant to section 58-63-15(1).

Modern also argues that Eastern violated section 75-1.1 because “Eastern’s conduct

amounts to an inequitable use of power.” (ECF No. 39 at 13.) Modern points to a note that

appears in Eastern’s claim file for Mr. G which states, “We [Eastern] no longer have coverage

for Insured and therefore it is in our best interest to settle full and final eliminating all future

exposure.” (ECF No. 39-3 at 89.) Modern argues that this note, in addition to Eastern’s

failure to obtain a resignation and release as part of Mr. G’s settlement, amounts to an unfair

and deceptive act. (ECF No. 39 at 13.) As discussed with respect to Modern’s breach of

contract claim, “an insurer may act in its own interest in settlement of the claim.” Cash, 528

S.E.2d at 380. Evidence that Eastern considered its own interests in settling Mr. G’s claim,

such as the above-referenced note, does not amount to an unfair and deceptive act. See id.

With respect to Mr. H’s claim, Modern does not specify any particular subsection of

section 58-63-15(11) that Eastern violated. (ECF No. 39 at 17.) Instead, Modern argues that

“Eastern’s admission in its claim files that it was aware of and considering both Modern’s

deductible amount and the fact that Modern had terminated its relationship with Eastern”

shows that Eastern was engaged in unfair and deceptive business practices. (ECF No. 39 at

17.) Both of the occurrences Modern appears to reference, however, occurred in relation to

Mr. G and Mr. S, not Mr. H. (See ECF No. 39-3 at 62–63, 89 (Eastern noting in connection

to Mr. G’s claim that Modern was no longer insured by Eastern); ECF No. 39 at 15; ECF No.

39-4 at 23 (Eastern noting in connection to Mr. S’s claim that Modern was no longer insured

by Eastern).) Those two occurrences, therefore, would not create a genuine issue of any

material fact as to whether the handling of Mr. H’s claim constituted a violation of sections

58-63-15(11) or 75-1.1.

With respect to Mr. S’s claim, Modern essentially restates its claim for breach of

contract. (See ECF No. 39 at 14–15.) Modern argues that Eastern violated section 58-63-

15(11)(a), which prohibits “[m]isrepresenting pertinent facts . . . relating to coverages at issue,”

by settling the case for over $5,000 more than it originally told Modern. (ECF No. 39 at 14–

15.) Modern again appears to misinterpret the statute at issue: the alleged misrepresentations

of which Modern complains relate to the terms of a settlement, not the “coverages at issue.”

(Id.); see, e.g., Nelson v. Hartford Underwriters Ins. Co., 630 S.E.2d 221, 230–32 (N.C. Ct. App.

2006) (addressing a claim pursuant to section 58-63-15(11)(a) regarding a dispute over a denial

of coverage). Modern has not presented any evidence regarding a dispute over the coverage

of Mr. S’s claim. (See ECF No. 39 at 14–15.) Therefore, summary judgment is appropriate as

to Mr. S’s claim.13

Having addressed the three underlying workers’ compensation claims which form the

basis of Modern’s allegations, this Court does not find that Modern has set forth sufficient

evidence to create a genuine issue as to whether a reasonable juror could find violations of

section 58-63-15(11)14 or section 75-1.1. Accordingly, Eastern is entitled to summary

judgment as a matter of law with respect to Modern’s third and fourth causes of action.

13 To the extent that Modern argues that Eastern violated section 58-63-15(11)(b) by

“communicat[ing] horribly,” (ECF No. 39 at 15), such a claim fails for the same reasons as its section

58-63-15(11)(b) claim related to Mr. G. Modern does not identify any “communication” that Eastern

failed to “acknowledge” or to respond to “reasonably promptly.” N.C. Gen. Stat. § 58-63-15(11)(b).

14 Modern’s complaint alleges violations of three other violations of section 58-63-15(11). (ECF No.

4 ¶ 96(c)–(e).) Because Modern does not address these in its brief and this Court, after review of the

record, does not find any violations of those subsections, the Court will grant summary judgment as

to those subsections as well. See Oliver, 208 F. Supp. 3d at 690 (“Courts have recognized that a party's

failure to address an issue in its opposition brief concedes the issue.”).

V. CONCLUSION

In reviewing the parties’ evidentiary motions, the Court first grants Modern’s motion

to strike as it related to the declaration of Thomas French and denies the motion to strike as

it related to the declaration of Jack Holmes. Second, the Court grants Eastern’s motion to

exclude the testimony and report of Mr. Senter, Modern’s expert. Third, Modern has failed

to demonstrate a genuine issue of any material fact as to all claims, which include Modern’s

breach of contract claim as it relates to the settlement of Mr. H, Mr. G’s and Mr. S’s workers’

compensation claims, its negligent claims handling claim, and its two unfair and deceptive

trade practices claims. Accordingly, summary judgment is appropriate as to all of Modern’s

claims.

For the reasons outlined herein, the Court enters the following:

[ORDER TO FOLLOW ON NEXT PAGE]

ORDER

IT IS THEREFORE ORDERED that Plaintiff’s Motion to Strike, (ECF No. 35), is

GRANTED IN PART AND DENIED IN PART. The Motion is GRANTED as to the

Declaration of Thomas A. French, (ECF No. 33-1), and DENIED as to the Declaration of

Jack S. Holmes, (ECF No. 33-2).

IT IS FURTHER ORDERED that Defendants’ Motion in Limine is GRANTED,

(ECF No. 49), and the Court excludes the testimony and report of Plaintiff’s expert.

IT IS FURTHER ORDERED that Defendants’ Motion for Summary Judgment, (ECF

No. 32), is GRANTED as to all claims, and all claims are hereby DISMISSED WITH

PREJUDICE.

This, the 23rd day of September 2019.

/s/ Loretta C. Biggs

United States District Judge