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Bowles v. BCJ Trucking Services8/2/2005
ing on appeal. Creel v. Town of Dover, 126 N.C. App. 547, 552, 486 S.E.2d 478, 480-81 (1997) (citing Mabe v. Granite Corp., 15 N.C. App. 253, 255, 189 S.E.2d 804, 806 (1972)). Our review is limited to a de novo review of the Commission's conclusions of law. Allen v. Roberts Elec. Contr'rs, 143 N.C. App. 55, 63, 546 S.E.2d 133, 139 (2001) (quoting Lewis v. Sonoco Prods. Co., 137 N.C. App. 61, 68, 526 S.E.2d 671, 675 (2000)).
V. Covered Claim
IGA argues the Commission erred in finding plaintiff's claim met the definition of a "covered claim" as defined by N.C. Gen. Stat. § 58-48-20.
N.C. Gen. Stat. § 58-48-20(4) (2003) defines a "covered claim" as an unpaid claim, including one of unearned premiums, which is in excess of fifty dollars ($50.00) and arises out of and is within the coverage and not in excess of the applicable limits of an insurance policy to which this Article applies as issued by an insurer, if such insurer becomes an insolvent insurer . . . .
An insolvent insurer is:
(i) an insurer licensed and authorized to transact insurance in this State either at the time the policy was issued or when the insured event occurred and (ii) against whom an order of liquidation with a finding of insolvency has been entered after the effective date of this Article by a court of competent jurisdiction in the insurer's state of domicile or of this State under the provisions of Article 30 of this Chapter, and which order of liquidation has not been stayed or been the subject of a writ of supersedeas or other comparable order.
N.C. Gen. Stat. § 58-48-20(5) (2003).
The Commission concluded IGA's liability for plaintiff's claim arose when Reliance assumed Selective's obligations and rested its conclusion on applying the law of novation.
It is well established that
" he essential requisites of a novation are a previous valid obligation, the agreement of all the parties to the new contract, the extinguishment of the old contract, and the validity of the new contract" . . . . "Ordinarily . . . in order to constitute anovation the transaction must have been so intended by the parties."
Anthony Marano Co. v. Jones, 165 N.C. App. 266, 269, 598 S.E.2d 393, 395 (2004) (quoting Tomberlin v. Long, 250 N.C. 640, 644, 109 S.E.2d 365, 368 (1959) (citations omitted)).
Novation may be defined as a substitution of a new contract or obligation for an old one which is thereby extinguished . . . ovation implies the extinguishment of one obligation by the substitution of another.Where the question of whether a second contract dealing with the same subject matter rescinds or abrogates a prior contract between the parties depends solely upon the legal effect of the latter instrument, the question is one of law for the courts . . . .
Tomberlin, 250 N.C. at 644, 109 S.E.2d at 367-68 (quotations omitted).
Here, the Commission found as fact:
he Assumption Reinsurance Agreement approved by the Commissioner of Insurance that became effective on December 31, 1998 resulted in a novation of the original contract for insurance entered into by the Selective Fund and BCJ Trucking Services, Inc. Reliance National Indemnity Company substituted for the Selective Fund as a party to the original contract for insurance between the Selective Fund and BCJ Trucking Services, Inc. No new contract of insurance was formed as a result of this novation. No separate negotiations between Reliance National Indemnity Company and BCJ Trucking Services, Inc. took place resulting in a new and separate contract for insurance between the parties.
The Commission concluded as
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