The North Carolina Court of Appeals held that even when an insurer has paid only a portion of an insured’s loss, it has acquired an interest in a lawsuit sufficient to permit intervention. Wichnoski v. Piedmont Fire Prot. Sys., LLC, 2016 WL 7976125 (N.C. Ct. App. Dec. 30, 2016).
A fire sprinkler system in a condominium building burst and flooded several units, including the plaintiff’s. The plaintiff presented a claim to its insurer for various losses. The insurer paid some, but not all, of the claims. Thereafter, the plaintiff sued the installer and inspector of the fire sprinkler system. Because the insurer had covered some of the plaintiff’s losses, it moved to intervene. The trial court denied intervention because the insurer had not paid all losses and therefore was not fully subrogated, relying on Hardware Dealers Mutual Fire Ins. Co. v. Sheek, 158 S.E.2d 635 (N.C. 1968), where the North Carolina Supreme Court held that an insurer that was only partially subrogated could not initiate claims against a tortfeasor for losses suffered by its insured. The insurer appealed.
The Court of Appeals reversed. It first found Hardware Dealers to be inapplicable because the issue there was whether an partially subrogated insurer could initiate claims, not whether a partially subrogated insurer could intervene in ongoing legal proceedings. Moreover, the Court of Appeals reasoned that whether a party can intervene turns upon whether the party has acquired an interest in the litigation, and not whether an insurer has been partially or fully subrogated. It held that both partial and full subrogation “vests an equitable right to reimbursement in the insurer,” and that the right to reimbursement constitutes an interest. It concluded that even partial payment of the plaintiff’s damages is sufficient for an insurer to acquire an interest in a lawsuit to satisfy intervention requirements.