6 months ago

Subrogation Requires Payment by Plaintiff
Post 5043

Plaintiff Intrepid Direct Insurance Agency ("Intrepid Agency"), allegedly suing as subrogee of Morning Star, LLC ("Morning Star"), filed a complaint against Defendants Amerex Corp. ("Amerex") and Pye-Barker Fire &Safety, LLC ("Pye-Barker").

Belatedly learning that the suit was brought in the name of the insurance broker rather than the insurer, Intrepid Agency filed a motion to amend its complaint "to correct [a] misnomer by correcting the name of Plaintiff" to Intrepid Insurance Company ("Intrepid Insurance"). The Defendants filed motions to dismiss for lack of subject-matter jurisdiction, arguing that Intrepid Agency was without standing to bring the initial complaint. The trial court granted Defendants' motions to dismiss, and Intrepid Agency appealed that decision.

In Intrepid Direct Insurance Agency, as Subrogee of Morning Star, LLC d/b/a Hardee's Restaurants v. Amerex Corp. and Pye-Barker Fire & Safety, LLC., No. COA24-583, Court of Appeals of North Carolina (April 2, 2025) the Court of Appeals resolved the dispute with consideration of the lack of standing.

BACKGROUND

On 22 December 2019, a fire caused significant damage to a Hardee's restaurant in Albemarle, North Carolina. The restaurant was owned and operated by Morning Star. The restaurant was covered by an insurance policy provided by Intrepid Insurance; Intrepid Agency served as the policy's broker.

Morning Star's claims for damages sustained to the restaurant as a result of the fire were paid.

Three years after the suit was filed Intrepid Agency moved to amend its complaint to correct the name of the plaintiff to Intrepid Insurance, the true holder of the right to subrogate.

Amerex and Pye-Barker, learning from Intrepid Agencry's motion to amend that they were sued by the wrong party, filed motions to dismiss. Both motions argued that Intrepid Agency lacked standing to bring the claims advanced in the initial complaint because Intrepid Agency was not a "real party in interest."

The trial court determined that it lacked subject-matter jurisdiction to grant Intrepid Agency's motion to amend, the trial court entered an order granting Defendants' motions to dismiss. Intrepid Agency appealed.

DISCUSSION

On appeal, Intrepid Agency was faced with an argument it lacked standing that concerns the trial court's subject-matter jurisdiction and is therefore properly challenged by a Rule 12(b)(1) motion to dismiss.

ANALYSIS

Rule 15 governs the amendment of complaints. Subsection (c) provides that any "claim asserted in an amended pleading is deemed to have been interposed at the time the claim in the original pleading was interposed, unless the original pleading does not give notice of the transactions, occurrences, or series of transactions or occurrences, to be proved pursuant to the amended pleading.

North Carolina statutes require that every claim shall be prosecuted in the name of the real party in interest.

When the insurance company paid the insured and covers the loss in full, the insurance company, as a necessary party plaintiff, must sue in its own name to enforce its right of subrogation against the tortfeasors.

According to the amended complaint, Intrepid Insurance paid Morning Star's claims under the insurance policy; as such, Intrepid Insurance was the necessary-party plaintiff and was required to sue in its own name to enforce its right of subrogation against Defendants.

Because Intrepid Agency lacked standing to bring these claims, the complaint was a nullity; consequently, the trial court lacked subject-matter jurisdiction to consider the motion to amend and was therefore required to grant Defendants' motions to dismiss.

A universal principle as old as the law is that the proceedings of a court without jurisdiction of the subject matter are a nullity. The Court of Appeals was unable to consider the plaintiff's appellate argument that it should have been allowed to add an additional party plaintiff to an already filed action and have the new plaintiff's claims relate back to the original filing.

The Court of Appeals concluded that because the trial court did not have subject-matter jurisdiction over the proceeding at the time of filing, the court did not have the authority to order such substitution of party, and any attempt to do so would have been a nullity.

Intrepid Agency was inadvertently named as plaintiff instead of Intrepid Insurance at the time of the complaint's filing, a mistake that deprived the trial court of subject-matter jurisdiction over the proceedings.

The trial Court was affirmed.

ZALMA OPINION

It is axiomatic that an insurance broker is not an insurer but merely the agent of the insured who transacted insurance with the insurance company. Intrepid Insurance Company paid the claim for the fire at the Hardee's restaurant and was subrogated to its insured's rights against the tortfeasors. Apparently after the running of the statute of limitations the plaintiff tried to change the identity of the plaintiff and correct the error in the pleading. It didn't work. The subrogating insurer is not without a remedy since it alleged the error in naming the plaintiff was counsel's error and the insurer may sue its lawyers.

Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos.

Subscribe to my substack at https://barryzalma.substack.com/subscribe

Go to X @bzalma; Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01; Go to Barry Zalma videos at Rumble.com at https://rumble.com/account/content?type=all; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg

Go to the Insurance Claims Library – https://lnkd.in/gwEYk

Loading comments...