Allstate Indem. Co. v. Riley

• Court: U.S. District Court — District of South Carolina
• Writing for the Court: Timothy M. Cain, United States District Judge
• Citation: Allstate Indem. Co. v. Riley, 502 F.Supp.3d 1045 (D. S.C. 2020)
• Decision Date: 24 November 2020
• Docket Number: Civil Action No. 6:19-cv-2273-TMC
• Parties: ALLSTATE INDEMNITY COMPANY, Plaintiff, v. Lydia RILEY, individually and as Personal Representative of the Estate of Rhoda Ann Clark; David Riley; and Julie Lyn Kuhn, as parent and natural guardian of W.W.K., a minor, Defendants.

502 F.Supp.3d 1045

ALLSTATE INDEMNITY COMPANY, Plaintiff,

v.Lydia RILEY, individually and as Personal Representative of the Estate of Rhoda Ann Clark; David Riley; and Julie Lyn Kuhn, as parent and natural guardian of W.W.K., a minor, Defendants.

Civil Action No. 6:19-cv-2273-TMC

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

Signed November 24, 2020

Alfred Johnston Cox, Gallivan White and Boyd, Columbia, SC, Janice Holmes, Clyde and Co. US LLP, San Francisco, CA, for Plaintiff.

Larry Lee Plumblee, Eppes and Plumblee, Greenville, SC, for Defendants Lydia Riley, David Riley.

Stephen Richard Hedrick Lewis, Covington Patrick Hagins Stern and Lewis, Greenville, SC, for Defendant Julie Lyn Kuhn.

ORDER

Timothy M. Cain, United States District Judge

This declaratory judgment action arises out of a personal injury lawsuit currently pending in the Court of Common Pleas for Greenville County, South Carolina (the "Underlying Action"), brought by Defendant Julie Lyn Kuhn ("Kuhn"), as parent and natural guardian of W.W.K., a minor, against Defendants Lydia Riley ("Lydia"), individually and as the Personal Representative of the Estate of Rhoda Ann Clark ("Clark" or the "Estate") and David Riley ("David"). See Kuhn et al. v. Riley et al. , No. 2019CP2303134, Greenville County Thirteenth Judicial Circuit Public Index, https://www2.greenvillecounty.org/SCJD/PublicIndex/PISearch.aspx (last visited Nov. 17, 2020).¹ Plaintiff Allstate Indemnity Company ("Allstate") is currently providing a defense for the Estate, Lydia, and David in connection with the Underlying Lawsuit under a reservation of rights pursuant to a homeowners’ insurance policy issued by Allstate to Clark. (ECF No. 1 at 4). On August 13, 2019, Allstate brought this action against Defendants seeking to have the court determine the rights of the parties under the Policy and to declare whether Allstate has a duty to defend or indemnify the Estate, Lydia, or David for the claims asserted by Kuhn in the Underlying Action. Id. at 12.

On May 20, 2020, Allstate moved for summary judgment as to all claims. (ECF No. 32). Defendants filed a joint response in opposition on June 23, 2020, (ECF No. 37), and Allstate replied, (ECF No. 41). Accordingly, this matter is now ripe for review. After carefully reviewing the record and the submissions of the parties, the court concludes a hearing is unnecessary to decide this matter. For the reasons set forth below, the court grants summary judgment in favor of Allstate.

BACKGROUND

The material facts in this case, as set forth herein, are undisputed. Clark owned a home located at 36 Hillside Circle, Greenville, SC 29607 (the "Home"), where she resided with her daughter, Lydia, and Lydia's four children, including David. See (ECF Nos. 32-1 at 2, 7, 9; 32-4 at 2–3; 32-11 at 2; 37 at 1). In January 2016, Lydia began babysitting children and providing daycare services in the Home in order to supplement her income. (ECF No. 32-3 at 6–8). Although she did not obtain a business license to operate a daycare facility in the Home, Lydia did obtain her certification as a Home Supports Caregiver to work with children with special needs through the Greenville County Disabilities and Special Needs Board. Id. at 23–25. Lydia placed an advertisement on Craigslist.com indicating she was looking to care for a few children, aged infants to toddlers, in the Home between 8:00 a.m. to 4:00 p.m. at a rate of $5.00 per hour per child. (Id. at 6–7, 32). She also created written policies and procedures under the name "Lydia Riley's Family Services," which she provided to the parents of the children she babysat. Id. at 8–9, 33. Pursuant to the policies and procedures, payment for weekday care was due on Friday or the last day that care would be provided for the week, and payment for weekend care was due upon arrival. Id. at 33. Evening meals were available to the children for an additional $4.00 per child, and, if a parent was late picking up their child, an additional fee of $2.00 was added every ten minutes beyond the agreed-upon pick-up time. Id. Any late payment resulted "no childcare being provided the following week and subsequent childcare [would] only continue once full payment [was] made, along with a $10 Late Payment Fee." Id.

Lydia estimates that, from January 2016 through August 2016, she made between $600.00 and $900.00 dollars per week through her babysitting activities. (ECF No. 32-4 at 6). On her 2016 taxes, Lydia filed a Schedule C Profit or Loss from Business, reporting gross income of $12,713.00 from her "child care" business. (ECF Nos. 32-3 at 10, 41; 32-5). Lydia also reported the following expenses associated with her child-care business: car and truck expenses; legal and professional services; office expenses; repairs and maintenance; supplies; utilities; and wages. (ECF Nos. 32-3 at 41; 32-5). Additionally, Lydia filed a Federal Schedule C Depreciation Schedule and an Alternative Minimum Tax Depreciation Report claiming depreciation of her vehicle related to her child-care business. (ECF Nos. 32-6; 32-7).

Kuhn found Lydia's advertisement for child-care services on Craigslist.com and, in February of 2016, hired Lydia to babysit her minor son, W.W.K., while she was at work. (ECF Nos. 32-8 at 2–3; 32-9 at 2). Due to Kuhn's long hours, Lydia agreed to charge her a flat rate to watch W.W.K., which Kuhn paid once a week. (ECF No. 32-8 at 5). According to Lydia's deposition testimony, she babysat W.W.K. anywhere from 60 to 150 hours a week. See (ECF No. 32-3 at 14–16).

August 1, 2016 Incident

Lydia's son, David, has lived at the Home with Clark and Lydia since he was four years old. (ECF No. 32-11 at 2). In the spring of 2015, David graduated from high school and, that fall, began attending college in Santa Clara, California. Id. at 3. After his first semester, he returned to the Home for Christmas break. Id. While he was home, he bought a handgun from a friend to use for "personal reasons, self-protection."

Id. at 6. When he left to go back to California for his second semester in January 2016, David left the handgun on top of a grandfather clock in the living room of the Home. Id. at 9; (ECF No. 32-3 at 2). David returned to the Home after his second semester, in the summer of 2016, at which point he retrieved the gun. (ECF No. 32-11 at 5, 9); see also (ECF No. 32-3 at 2). Typically, whenever he left the home, David would take the gun with him and leave it in a locked compartment in his vehicle. (ECF Nos. 32-3 at 2; 32-11 at 7, 9). While he was at home, he would wear the gun in a holster or leave it in his bedroom on an ottoman or his bedside table. (ECF Nos. 32-2 at 3; 32-11 at 10).

On the evening of July 31, 2016, Lydia was at the hospital with Clark and David was at Home with two of his sisters. See (ECF No. 32-11 at 11). David decided to visit a friend's house and, because there had been "several incidents" in their neighborhood the week before, David decided to leave his gun with his sisters in case they needed it and hid it "under the greenery" on their counter-height kitchen table. Id. at 10–11; see also (ECF No. 32-3 at 30 (describing that gun was "on a counter-height table in the middle, underneath greenery ... in the kitchen")). David did not return to the Home until late that night and went straight to bed, leaving the gun where it was hidden on the kitchen table. (ECF No. 32-11 at 11).

The next morning, Monday, August 1, 2016, David woke up early and went to work, again forgetting to take or move his gun. Id. That day, Lydia was babysitting W.W.K. and another child at the Home and brought them with her to go grocery shopping. See (ECF No. 32-3 at 18, 26–28). When they returned to the Home, the children were helping Lydia bring the groceries into the house. Id. at 28. While Lydia was outside, W.W.K. was setting groceries on the kitchen table when he found David's gun and accidentally shot himself in the hand. See (ECF Nos. 32-3 at 27–30; 32-8 at 7; 32-9 at 1; 32-10 at 3; 32-11 at 11; 32-13; 32-14).

The Greenville Police Department and the South Carolina Department of Social Services ("DSS") both conducted investigations into the incident, during which Lydia agree to stop providing child-care services out of the Home. See (ECF Nos. 32-9 (Kuhn's police report); 32-12 (DSS's On-Site Visit Report and Deficiency Citation); 32-13 (Crime Scene Investigation Report); 32-14 (Indictment charging Lydia with "Children/Legal custodian, unlawful neglect of child"); 32-15 (DSS letter to Lydia noting she has been placed on the South Carolina Central Registry of Child Abuse and Neglect and denying her request for an administrative hearing)). Consequently, DSS placed Lydia's name on the South Carolina Central Registry of Child Abuse and Neglect, (ECF Nos. 32-1 at 9; 32-12; 32-15), and Lydia was criminally charged with unlawful neglect of a child in violation of Greenville County Ordinance § 63-05-0070, (ECF Nos. 32-3 at 4–5; 32-14). In exchange for Lydia's participation in and completion of the Pre-Trial Intervention Program ("PTI")—a diversion program for non-violent criminal offenders requiring community service, individual or group counseling, and payment of restitution—the criminal charges against her were expunged. (ECF Nos. 32-1 at 10, 10 n.5; 32-3 at 4–5).

Underlying Action

On May 31, 2019, Kuhn commenced the Underlying Action against Lydia, David, and the Estate, seeking to recover damages for the injuries W.W.K. sustained while in Lydia's care at the Home. See Kuhn , No. 2019CP2303134, Greenville County Public Index; (ECF No. 32-2). The Second Amended Complaint (the "Complaint") asserts that, on August 1, 2016, Clark owned the Home and both Lydia and David resided there. (ECF No. 32-2 at 1–2). Additionally, the Complaint asserts that both Clark and Lydia were aware that David owned and kept a loaded firearm in the Home. Id. at 2. The Complaint alleges that, on August 1, 2016, W.W.K. "was an invitee [at the Home] ... in the care,...