On February 20, 2018, the North Carolina Court of Appeals upheld a ruling of the North Carolina Business Court that provides further clarification on whether a claimant with a judgment against the insured may sue the insurer for deceptive trade practices. USA Trouser, S.A. de C.V. v. Williams, 2018 WL 943639 (N.C.App. 2018). In this case, Navigators Insurance Co. issued a directors and officers liability insurance policy to the insured International Legwear Group, Inc. (“ILG”). Plaintiff USA Trouser S.A. de C.V. (“USAT”), a trade creditor of the insured, sold socks on credit to the insured. In federal court in Charlotte, USAT sued ILG and three of its directors/officers for failing to disclose ILG’s worsening financial condition while continuing to obtain products from USAT upon credit. USAT obtained a default judgment for $2.0 mil. USA Trouser later filed the instant action in state court against Navigators asserting claims for, among other things, bad faith claims settlement practices and unfair trade practices pursuant to N.C. Gen. Stat. § 75-1.1. Navigators moved to dismiss. In opposing the motion, USAT argued it became a third-party beneficiary to the insurance policy upon entry of the default judgment and obtained the right to payment on the judgment and to sue the insurer directly for its failure to pay. Business Court Judge Gale granted the motion to dismiss and USAT appealed.
https://ncbarblog.com/wp-content/uploads/2018/06/Blog-Header-1-1030x530.png00NCBARBLOGhttps://ncbarblog.com/wp-content/uploads/2018/06/Blog-Header-1-1030x530.pngNCBARBLOG2018-03-20 13:32:562018-03-20 13:32:56Trade Creditor Had No Right to Bring Deceptive Trade Practice Claim Against Liability Insurer of Tortfeasor/Insured