Progressive Southeastern Insurance Company v. WILLIAM W. MCLEOD, Administrator of the Estate of Annie Morgan McLeod; KARON MCLEOD

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 12-1021
PROGRESSIVE SOUTHEASTERN INSURANCE COMPANY,
Plaintiff - Appellee,
v.
WILLIAM W. MCLEOD, Administrator of the Estate of
Annie Morgan McLeod; KARON MCLEOD,
Defendants - Appellants.
Appeal from the United States District Court for the District of
North Carolina, at Wilmington. David W. Daniel, Magistrate
Judge. (7:08-cv-00161-DAN)
Submitted: June 18, 2012 Decided: July 23, 2012
Before GREGORY, AGEE and FLOYD, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Maynard M. Brown, JOHNSON & LAMBETH, Wilmington, North Carolina,
for Appellants. Glenn C. Raynor, YOUNG MOORE AND HENDERSON, PA,
Raleigh, North Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit.

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PER CURIAM:
I.
Annie McLeod, the daughter of Appellees William and
Karen McLeod (“Mr. and Mrs. McLeod”), sustained fatal injuries
in March of 2008 when her car was struck by another vehicle.
Because the driver of the other vehicle, Kevin Cardwell, did not
have liability coverage that applied to the accident, he
qualifies as an “uninsured motorist” under North Carolina law.
See N.C. GEN. STAT. § 20-279.21(b)(3). Mrs. McLeod was the named
insured of a policy underwritten by Progressive Southeastern
Insurance Company. The policy provides combined uninsured
(“UM”) and underinsured (“UIM”) bodily injury coverage limits of
$50,000 per accident and $100,000 per accident, respectively.
At the time of the accident, North Carolina law
required that an insurance carrier provide an insured an
opportunity to select or reject UM/UIM coverage in an amount
greater than $50,000 per person and $100,000 per accident; it
further required that the insurance company document that
opportunity via a form promulgated by the North Carolina Rate
Bureau, which was to be signed by the insured. N.C. GEN. STAT.
§§ 20-279.21(b)(3) & (4) (2000). Progressive cannot locate a
signed copy of that form for Mrs. McLeod’s policy.

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Progressive filed this action pursuant to the federal
court’s diversity jurisdiction seeking a declaratory judgment
that it is required to pay only up to the combined
$50,000/$100,000 UM/UIM coverage provided by the policy. The
McLeods assert in their answer that Progressive must provide
coverage up to $1,000,000. They rely on a decision by the North
Carolina Court of Appeals, Williams v. Nationwide Mut. Ins. Co.,
621 S.E.2d 644 (N.C. Ct. App. 2005), where that court held that
a “total failure” to provide an insured with an opportunity to
select or reject UIM coverage of a certain amount would compel a
court to declare that the UIM coverage limit must be raised to
$1,000,000, the maximum amount permissible under state law. Id.
at 647. After a bench trial, the magistrate judge rejected this
interpretation of North Carolina law, holding that an earlier
decision by the state’s Supreme Court, Nationwide Mutual
Insurance Co. v. Fortin, 513 S.E.2d 782 (N.C. 1999), is
inconsistent with Williams. It held that Progressive is only
obligated to provide UM coverage up to the bodily injury limits
of the policy, and entered a judgment in Progressive’s favor.
The McLeods timely appeal.
II.
We dispense with oral argument because the facts and
legal contentions are adequately presented in the materials

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before the court and argument would not aid the decisional
process. We hold that there was no “total failure” by
Progressive to provide Mrs. McLeod with the opportunity to
reject or select UM coverage and therefore affirm the magistrate
judge’s decision.
A.
Judgments following a bench trial are reviewed under a
mixed standard: “[F]actual findings may be reversed only if
clearly erroneous, while conclusions of law . . . are examined
de novo.” Roanoke Cement Co. v. Falk Corp., 413 F.3d 431, 433
(4th Cir. 2005).
The legal issue raised in this appeal concerns the
proper interpretation of North Carolina law. While sitting in
diversity, the federal courts are not bound by the precedent of
intermediate appellate courts, but must adjudicate legal
questions consistent with the precedent of the state’s highest
court and, if no such precedent exists, predict how the state’s
highest court would rule if presented with the issue. Wells v.
Liddy, 186 F.3d 505, 527-28 (4th Cir. 1999). At the same time,
this Court has held that “[a]n opinion of an intermediate
appellate court is persuasive in situations where the highest
court of the state has not spoken,” although the intermediate
court’s opinion “does not prevail where the federal court is

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convinced that the highest court of the state would rule to the
contrary.” Sanderson v. Rice, 777 F.2d 902, 905 (4th Cir.
1985).
B.
At the time the McLeods’ policy was issued, North
Carolina law provided that UM coverage is “not to be less than
the financial responsibility amounts for bodily injuries set
forth in G.S. 20-279.5 nor greater than one million dollars
($1,000,000), as selected by the policy owner.” N.C. GEN. STAT.
§ 20-279.21(b)(3) (2002). The law also permitted an insured to
reject this coverage. Id. However, “rejection of or selection
of different coverage limits for uninsured motorist coverages
. . . shall be made in writing by a named insured on a form
promulgated by the Bureau and approved by the Commissioner of
Insurance.” Id. Finally, “[i]f the named insured does not
reject uninsured motorist coverage and does not select different
coverage limits, the amount of underinsured motorist coverage
shall be equal to the highest limit of bodily injury liability
coverage for any one vehicle in the policy.” N.C. GEN. STAT.
§ 20-279.21(b)(3) (2002).*
* The purpose of this rather tangled series of legislative
pronouncements is nicely summarized in Hendrickson v. Lee, 459
S.E.2d 275, 279 (N.C. Ct. App. 1995): “Thus, although an
(Continued)

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In this case the parties agree that Progressive was
obligated to give Mrs. McLeod the option of rejecting or
selecting additional UM coverage. Br. of Appellee at 3-5.
However, Progressive cannot produce a copy of the Bureau-
approved document signed by Mrs. McLeod. Because the burden of
proof to demonstrate that an insured signed the form rests with
the insurance carrier, Hendrickson v. Lee, 459 S.E.2d 275, 279
(N.C. App. 1995), Progressive does not dispute the magistrate
judge’s finding that no selection/rejection form was ever signed
by Mrs. McLeod. Thus the only issue in dispute is the level of
UM coverage provided by North Carolina law in cases where the
insured failed to comply with § 20-279.21(b)(3).
This dispute centers on the proper interpretation of
two seemingly conflicting opinions: an earlier decision from
the North Carolina Supreme Court and a later one issued by the
North Carolina Court of Appeals. In State Farm v. Fortin, North
Carolina’s Supreme Court held that the insurer failed to provide
an adequate opportunity for its insured to reject or select
additional UIM coverage. 513 S.E.2d at 784. It then turned to
address the amount of UIM coverage provided by the policy given
insured is not legally obligated to contract for [UM] coverage
in any amount, [UM] coverage equal to a policy’s liability
limits will be assumed unless the insured validly rejects that
amount of coverage.” Id. (citations omitted).

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this failure and held, pursuant to the plain language of the
statute, that “[i]f the named insured does not reject
underinsured motorist coverage and does not select different
coverage limits, the amount of . . . coverage shall be equal to
the highest limit of bodily injury liability coverage for any
one vehicle in the policy.” Id. at 786. In Williams v.
Nationwide Mutual Insurance Co., the North Carolina Court of
Appeals considered a fact pattern highly analogous to Fortin.
There, the insurer stipulated that it had not provided the
insured with an opportunity to reject or select additional UIM
coverage. 621 S.E.2d at 645. Rather than applying the
straightforward language of § 20-279.21(b)(3), however, the
Williams Court created a new rule out of whole cloth, holding
that because there was a “total failure” to provide the insured
with the opportunity to select coverage, “the insured was
entitled to the highest available limit of UIM coverage of
$1,000,000.” Id. at 647.
It is an open question whether the Williams rule is
good law in North Carolina. On the one hand, § 20-279.21 is
clear on its face that the Fortin rule governs all cases where
there is a failure to provide the opportunity to select coverage
-- the Fortin decision itself noted the statute was unambiguous.
Fortin, 513 S.E.2d at 785-86. Moreover, Fortin considered and
rejected an appellate court decision -- interpreting an earlier

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version of the same statute -- that held the $1,000,000 limit
applied. Id. at 784-85. On the other hand, it is logically
possible to interpret Williams and Fortin so that they are
consistent: in Fortin the insured provided an opportunity to
select coverage, but failed to do so in the manner dictated by
the statute. Id. at 783. In Williams, by contrast, the parties
stipulated that “[n]either [of the insureds] were offered by
Nationwide or its authorized agent an opportunity to select or
reject UIM limits . . . .” Williams, 621 S.E.2d at 645.
Further, the Williams court noted a policy concern that would
justify this reading: if the remedial section of the statute
applied in “total failure” cases, “insurers would be permitted
to establish default UIM coverage simply by failing to provide
the proper rejection/selection forms to their clients.” Id. at
647.
Unfortunately, while the court of appeals has
interpreted the Williams decision, see, e.g., Nationwide
Property & Casualty Ins. Co. v. Martinson, 701 S.E.2d 390 (N.C.
Ct. App. 2010); N.C. Farm Bureau Mut. Ins. Co. v. Jenkins, 700
S.E.2d 434 (N.C. Ct. App. 2010), the North Carolina Supreme
Court has not taken up the issue. Thus there is no definitive
statement on this area of law that binds this Court. Rather
than resolving this difficult state-law question one way or the

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other, we affirm the magistrate judge’s decision on alternative
grounds.
C.
Assuming arguendo that the Williams rule is still
viable, Progressive did not commit a total failure in providing
Mrs. McLeod with the chance to select UM coverage. We therefore
affirm the district court.
The magistrate judge made several findings of fact
supporting this conclusion. The court first noted that when
Mrs. McLeod signed the insurance policy, she acknowledged and
agreed to a statement which read in part,
“Uninsured/Underinsured Motorists Coverage, and the applicable
limits of these coverages were explained to me, and I have
selected the limits shown.” The court further found that when
she was purchasing car insurance she wished to “keep costs down
by choosing the lowest required coverage and understood that
greater combined UM/UIM coverage limits would have resulted in
higher premiums.” Finally, the court determined that
“subsequent to the accident, the McLeods continued to renew the
Policy at the same policy limits . . . despite being on notice
since at least the time that the complaint was filed in this
action of their ability to select or reject different coverage
limits.” These facts, taken together, lead us to conclude that

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the Williams “total failure” rule is inapplicable to this case
and that the magistrate did not err in holding, consistent with
Fortin, that the McLeods are entitled only to coverage in an
amount “equal to the highest limit of bodily injury liability
coverage for any one vehicle in the policy.” Fortin, 513 S.E.2d
at 786.
III.
For the reasons discussed above, we affirm the
magistrate judge’s decision.
AFFIRMED

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