The North Carolina Supreme Court held that the statute of limitations on an insurer's claim for breach of a subrogation clause of an insurance policy began to run when the insurer received notice of payment by a third party and the insureds' denied the insurer subrogation rights to that recovery. North Carolina Farm Bureau Mut. Ins. Co. v. Hull, 809 S.E.2d 565 (N.C. 2018).
Insureds of the insurer were involved in an automobile collision, and the insurer tendered a settlement offer under its UIM coverage requiring the insureds to execute and return a settlement agreement before the insurer would tender the balance of its UIM limits. The settlement agreement included a provision memorializing the insurer's subrogation rights against any recovery received from a third party, including any future recovery the insureds received from any tortfeasor. The insureds, however, returned the proposed settlement agreement having crossed out the clause addressing subrogation rights in any additional recovery. The insurer paid the amount tendered. Thereafter, the insureds entered into settlement discussions with the tortfeasor. Upon learning of this potential recovery, the insurer claimed subrogation rights against any recovery from the tortfeasor or his insurance companies, but the insureds refused to honor the subrogation clause of the policy. In the ensuing litigation by the insurer, the insureds moved to dismiss claiming that the statute of limitations began to run at the time they returned the settlement agreement after striking through the subrogation clause; the insurer claimed that the statute of limitations did not begin to run until the insured reached a settlement with the third party and refused to reimburse the insurer under the policy's subrogation clause.
The North Carolina Supreme Court held that the statute of limitations began to run not when the insureds altered the proposed terms of the settlement agreement but when they settled with the third party and refused to honor the insurer's subrogation rights under the policy.
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