Allstate Fire & Cas. Ins. Co. v. Simpson

• Decision Date: 28 January 2016
• Docket Number: Civil Action No. 8:15–1908–HMH
• Parties: Allstate Fire and Casualty Insurance Company, Plaintiff, v. Joseph and Amanda Simpson, Defendants.
• Court: U.S. District Court — District of South Carolina

152 F.Supp.3d 487

Allstate Fire and Casualty Insurance Company, Plaintiff,

v.Joseph and Amanda Simpson, Defendants.

Civil Action No. 8:15–1908–HMH

United States District Court, D. South Carolina, Anderson Division.

Signed January 28, 2016

Geoffrey William Gibbon, McAngus Goudelock and Courie, Greenville, SC, for Plaintiff.

Eugene Clark Covington, Jr., Covington Patrick Hagins Stern and Lewis, Greenville, SC, for Defendants.

OPINION & ORDER

Henry M. Herlong, Jr.

, Senior United States District Judge

This matter is before the court on cross-motions for summary judgment. For the reasons stated below, the court grants the Defendants' motion for summary judgment and denies Allstate Fire and Casualty Insurance Company's (“Allstate”) motion for summary judgment.

I. Factual and Procedural Background

Allstate filed the instant declaratory judgment action seeking a declaration that “it is not obligated to pay or provide” underinsured motorist (“UIM”) coverage under insurance policy number 9 63 649818 04/18 (“Policy”) issued by Allstate to Amanda Simpson (“Amanda”) and Joseph Simpson (“Joseph”) because Amanda validly declined UIM coverage and coverage should not be added pursuant to State Farm Mutual Automobile Insurance Co. v. Wannamaker, 291 S.C. 518,354 S.E.2d 555 (S.C.1987)

. (Compl., prayer, ECF No. 1; Pl. Mem. Supp. Summ. J. Ex. D (Policy Declarations Pages), ECF No. 21–5.) On April 11, 2011, Amanda obtained a new policy¹ to insure a 1999 Ford, which was titled in her name, and a 2002 Chevy Malibu, which was titled in both Amanda and Joseph's name. (Pl. Mem. Supp. Summ. J. Ex. D (Policy Declarations Pages), ECF No. 21–5.) The Policy coverage period was April 18, 2011 to October 18, 2011.² (Id. Ex. D (Policy Declarations Pages), ECF No. 21–5.) Further, the Policy indicates that Allstate investigated the driving backgrounds of Amanda and Joseph and assigned a good driver rating to both. (Id. Ex. D (Policy Declarations Pages), ECF No. 21–5.)

At the time the Policy issued, Amanda was employed as a customer service representative for an Allstate agency. (Id. Ex. C (Amanda Dep. at 16), ECF No. 21–4.) As part of her job, Amanda stated that she prepared policies and explained UIM coverage. (Id. Ex. C (Amanda Dep. at 16), ECF No. 21–4.) On the Policy, Amanda and Joseph are both listed as named insureds. (Pl. Mem. Supp. Summ. J. Ex. D (Policy Declarations Pages), ECF No. 21–5.) Amanda completed and signed the declination form for UIM coverage. (Id. Ex. A (UIM offer form), ECF No. 21–2.) Amanda and Joseph were a couple and living together in April 2011, and they married on June 1, 2012. (Id. Ex. C (Amanda Dep. at 21), ECF No. 21–4.); Ex. F (Joseph Dep. at 5), ECF No. 21–6.) The Policy was amended in 2013 to reflect Amanda's name change from Amanda Taylor to Amanda Simpson. (Id. at 2, ECF No. 21–1.) Joseph testified that he did not have car insurance in April 2011, but that he had been covered previously by Nationwide until the engine blew up in his vehicle. (Id. Ex. F (Joseph Dep. at 6–7), ECF No. 21–6.) Both Amanda and Joseph testified that they never discussed any insurance issues together, including UIM coverage, other than Amanda telling Joseph that she had added him to the Policy. (Id. Ex. C (Amanda Dep. at 45, 65, ECF No. 21–4.) Joseph testified that he did not know that Amanda had obtained insurance for him until “she came home one day and told me that I had been added to the policy.” (Pl. Mem. Supp. Summ. J. Ex. F (Joseph Dep. at 8), ECF No. 21–6.) Amanda testified that she did not realize she had added Joseph as a named insured. (Id. Ex. C (Amanda Dep. at 45), ECF No. 21–4.) Joseph testified that he thought it was “okay” and “cool” that he was on the Policy. (Id. Ex. F (Joseph Dep. at 8), ECF No. 21–6.)

On October 12, 2013, the Defendants were involved in an automobile accident with another vehicle that was being operated by an impaired driver, who passed away as a result of injuries received in the accident. The Defendants filed a lawsuit against the estate of the impaired driver, which is currently pending in Pickens County, South Carolina, Court of Common Pleas, Civil Action Number 2015–CP–39–105. The Defendants have served Allstate with a notice of their claim for UIM coverage.

On November 23, 2015, Allstate filed a motion for summary judgment on its declaratory judgment claim. (Pl. Mot. Summ. J., ECF No. 21.) On December 7, 2015, the Defendants responded in opposition and filed a motion for summary judgment on Joseph's counterclaim seeking reformation of the Policy. (Defs. Resp. Opp'n Pl. Mot. Summ. J., ECF No. 23; Defs. Mot. Summ. J., ECF No. 24.) Allstate filed a reply to its motion for summary judgment on December 17, 2015, and a response in opposition to Defendants' motion for summary judgment on December 29, 2015. (Pl. Reply Supp. Mot. Summ. J., ECF No. 25; Pl. Resp. Opp'n Defs. Mot. Summ. J., ECF No. 26.) Further, on January 19, 2016, Allstate submitted an affidavit in support of its response in opposition to Defendants' motion for summary judgment. (Pl. Aff., ECF No. 29.) This matter is now ripe for consideration.

II. Discussion of the Law

A. Summary Judgment Standard

Summary judgment is appropriate only “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a)

. In deciding whether a genuine issue of material fact exists, the evidence of the non-moving party is to be believed and all justifiable inferences must be drawn in his favor. See

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). However, “[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted.” Id. at 248, 106 S.Ct. 2505

.

A litigant “cannot create a genuine issue of material fact through mere speculation or the building of one inference upon another.” Beale v. Hardy, 769 F.2d 213, 214 (4th Cir.1985)

. “[W]here the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, disposition by summary judgment is appropriate.” Monahan v. Cty. of Chesterfield, Va., 95 F.3d 1263, 1265 (4th Cir.1996) (internal quotation marks and citation omitted). “[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact.” Ball

i

nger v. N.C. Agric.

Extension Serv., 815 F.2d 1001, 1005 (4th Cir.1987) (internal quotation marks and citation omitted).

B. Meaningful Offer

Allstate alleges that it “is entitled to a presumption that there was a meaningful offer” because an offer of UIM coverage was made to Amanda, the Policy applicant and a named insured. (Pl. Mem. Supp. Summ. J. 6, ECF No. 21–1.) In contrast, the Defendants allege that Allstate was required to offer UIM coverage to Amanda and Joseph, individually, because they were both named insureds and applicants. (Defs. Mem. Opp'n Mot. Summ. J. 5, ECF No. 23.) “[T]he requirement of a meaningful offer of additional ... UIM coverage is intended to protect an insured. A meaningful offer of additional ... UIM [coverage] makes as certain as possible that an insured has actual knowledge of his options with respect to such coverages and is therefore able to make an informed decision with respect to his desired coverage.” Grinnell Corp. v. Wood, 389 S.C. 350, 698 S.E.2d 796, 800 (2010)

(citing Floyd v. Nationwide Mut. Ins. Co., 367 S.C. 253, 626 S.E.2d 6, 12 (2005) ). Consequently, “[a]ll law with respect to a meaningful offer of additional ... UIM coverage must be applied so as to effectuate this stated purpose.” Id. at 799 ; Carter v. Standard Fire Ins. Co., 406 S.C. 609, 753 S.E.2d 515, 518 (2013) (“ ‘[T]he UIM and [uninsured motorist] statutes are remedial in nature and enacted for the benefit of injured persons' and ‘should be construed liberally to effect the purpose intended by the Legislature.’ ” (quoting Floyd, 626 S.E.2d at 10 )).

Accordingly, the insurer bears the burden of establishing that it made a meaningful offer of UIM coverage. Whether an insurer has met its burden in this regard is a question of fact. If the insurer fails to comply with its statutory duty to make a meaningful offer to the insured, the policy will be reformed, by operation of law, to include UIM coverage up to the limits of liability insurance carried by the insured.

Liberty Mut. Fire Ins. Co. v. McKnight, No. 2:14–CV–02145–PMD, 125 F.Supp.3d 602, 607–08, 2015 WL 4878834, at *3 (D.S.C. Aug. 14, 2015)

(unpublished) (internal citations and quotation marks omitted); Butler v. Unisun Ins. Co., 323 S.C. 402, 475 S.E.2d 758, 759–60 (1996). A meaningful offer requires that: “(1) the insurer's notification process must be commercially reasonable, whether oral or in writing; (2) the insurer must specify the limits of optional coverage and not merely offer additional coverage in general terms; (3) the insurer must intelligibly advise the insured of the nature of the optional coverage; and (4) the insured must be told that optional coverages are available for an additional premium.” State Farm Mut. Auto. Ins. Co. v. Wannamaker, 291 S.C. 518, 354 S.E.2d 555, 556 (1987).

S.C.Code Ann. § 38–77–160

provides that automobile insurance carriers must offer “at the option of the insured, [UIM] coverage up to the limits of the insured's liability coverage ....” Further, S.C.Code Ann. § 38–77–350(A)

provides requirements for forms used in making offers of optional insurance coverage like UIM coverage and sets forth that

[t]his form must be used by insurers for all new applicants . The form, at a minimum, must provide for each optional coverage required to be offered:

(1) a brief and concise explanation of the coverage;

(2) a list of available limits and the range of premiums for the limits;

(3

...