Auto-Owners Ins. Co. v. Rhodes
| Citation | 405 S.C. 584,748 S.E.2d 781 |
| Decision Date | 25 September 2013 |
| Docket Number | No. 27316.,27316. |
| Court | United States State Supreme Court of South Carolina |
| Parties | AUTO–OWNERS INSURANCE COMPANY, Petitioner, v. Samuel W. RHODES; Piedmont Promotions, Inc; Marion L. Eadon d/b/a C & B Fabrications; C & B Fabrications, Inc.; and Low Country Signs, Inc., Respondents. Appellate Case No. 2009–143546. |
OPINION TEXT STARTS HERE
Alfred Johnston Cox, of Gallivan, White & Boyd, PA, John Lucius McCants of Rogers Lewis Jackson Mann & Quinn, LLC, both of Columbia, for Petitioner.
William O. Sweeny, III, William Roberts Calhoun, Jr., both of Sweeny Wingate & Barrow, PA, of Columbia, Creighton B. Coleman of Coleman Tolen & Swearingen, LLC, of Winnsboro, Bert Glenn Utsey, III, Matthew Vernon Creech, both of Peters Murdaugh Parker Eltzroth & Detrick, PA, of Walterboro, for Respondents.
Samuel W. Rhodes (“Rhodes”) and Piedmont Promotions, Inc. (“Piedmont”) sued Marion L. Eadon, d/b/a C & B Fabrication,1 for damages arising out of the faulty construction of three outdoor advertising billboard signs after one of the signs fell across Interstate 77. A Fairfield County jury returned a verdict for actual and punitive damages in favor of Rhodes (“the tort action”). At the time of the tort action, Eadon's two corporations, C & B Fabrications, Inc. and Low Country Signs, Inc., were listed as named insureds under a commercial general liability (“CGL”) policy (“the policy”) issued by Auto–Owners Insurance Company (“Auto–Owners”). Eadon sought indemnification from Auto–Owners for the verdict. In response, Auto–Owners filed this declaratory judgment action (the “DJ action”) to determine whether it has a duty to indemnify Eadon under the policy.
The circuit court judge found Eadon was insured by the policy and that all damages, except for the price of the signs, were covered by the policy. After post-trial motions were filed, the Court of Appeals reversed the tort action on the ground that venue was proper in Clarendon County rather than Fairfield County. Rhodes v. Eadon, Op. No. 2006–UP–413 (S.C. Ct.App. filed Dec. 15, 2006). Subsequently, Auto–Owners filed a motion to be relieved from the DJ order as the underlying tort action had been reversed and vacated. The judge denied this motion. On appeal, the Court of Appeals affirmed as modified the DJ order. Auto–Owners Ins. Co. v. Rhodes, 385 S.C. 83, 682 S.E.2d 857 (Ct.App.2009). This Court granted Auto–Owners' petition for a writ of certiorari to review the decision of the Court of Appeals. We affirm in part and reverse in part.
Eadon is the sole owner and shareholder of C & B Fabrication and Low Country Signs, Inc., both of which conducted business under the name C & B Fabrication. Rhodes is the sole owner and shareholder of Piedmont Promotions, Inc., which owns and leases outdoor advertising space in various locations. In 1999, Rhodes contracted with Eadon to design, fabricate, and erect three outdoor advertising signs on property owned by Rhodes that bordered Interstate 77 in Fairfield County. Rhodes obtained the requisite permits from the South Carolina Department of Transportation (“SCDOT”) to erect the three signs.
In December 2000, approximately ten months after the installation of the signs, the middle sign was discovered to be leaning toward I–77. Rhodes contacted Eadon to inform him of the problem. Shortly thereafter, Eadon sent a crew to address the issue. On January 20, 2001, three days after the crew visited the site, one of the other signs fell across I–77, blocking both lanes of southbound traffic. Based on its investigation, SCDOT ordered Rhodes to remove the remaining two signs and revoked Piedmont's permits to maintain signs on the property. Rhodes immediately requested that Eadon remove the two remaining signs. Eadon, however, removed only the one sign that was previously leaning and refused to remove the third and final sign.
Following this incident, a General Liability Notice of Occurrence/Claim was forwarded to Auto–Owners from Creech Roddey Watson Insurance, Eadon's insurance company. Upon receipt of this claim, Auto–Owners sent a reservation of rights letter to Eadon regarding the incident, stating it was unsure whether a claim existed under the CGL policy. Over the next few months, Auto–Owners paid several claims for damages caused by the fallen sign, but stated the CGL policy did not cover the majority of the expenses that would be incurred following the loss.
On December 12, 2001, Rhodes and Piedmont filed the tort action against “Marion L. Eadon d/b/a C & B Fabrication,” alleging damages to the real estate owned by Rhodes and lost income by Piedmont due to the negligent design, fabrication, and erection of the signs by C & B, which led to the removal of the three signs and the revocation of the SCDOT permits.
On October 14, 2002, while the tort action was pending, Auto–Owners filed the DJ action to determine whether coverage was provided pursuant to the CGL policy.
The tort action was tried in Fairfield County between August 30 and September 2, 2004. A jury returned a verdict for Rhodes and Piedmont in the amount of 3 million dollars in actual damages and 3.5 million in punitive damages for the negligence cause of action. Eadon appealed this verdict to the Court of Appeals.
While Eadon's appeal was pending, the circuit court judge issued an order in the DJ action on November 7, 2006. The judge found that Auto–Owners was obligated to indemnify Eadon for the judgment rendered in the tort action. In so ruling, the judge found the sign falling on the interstate constituted an “occurrence” that resulted in damages “beyond the defective work” to “property other than the defective work itself.” The judge further found “the loss of use of the remaining two signs and the consequential damages flowing therefrom was causally linked to the sign that fell and constituted property damage caused by an occurrence.”
Specifically, the judge found coverage for “property damage” based on the physical injury to the real estate, costs to remove the signs, and loss of use of the signs. The judge further found that Rhodes suffered diminution in value of his real property as SCDOT prohibited him from erecting signs in the future. The judge discounted all of the policy exclusions raised by Auto–Owners as Rhodes's claim for damages was based on the consequential damages incurred to his real estate rather than to the signs produced by C & B. However, the judge ruled that the contractual price of the signs was excluded as this fell within the purview of the “your work” exclusion.
On December 15, 2006, the Court of Appeals reversed the verdict in the tort action based on the trial court's failure to grant Eadon's motion to transfer venue to Clarendon County, his county of residence. Rhodes v. Eadon, Op. No.2006–UP413 (S.C. Ct.App. filed Dec. 15, 2006).
Based on this development, Auto–Owners filed a supplemental Rule 59(e), SCRCP, motion. Alternatively, Auto–Owners filed a motion pursuant to Rule 60, SCRCP, to have the DJ order declared null and void based on the judge's reliance on the evidence and testimony in the vacated tort action. The judge granted Auto–Owners' motion in part, striking only the portion of the order referencing the money damages awarded by the jury. The other portions of the order remained in full force and effect.
Auto–Owners appealed the DJ order to the Court of Appeals. The Court of Appeals affirmed as modified. Auto–Owners Ins. Co. v. Rhodes, 385 S.C. 83, 682 S.E.2d 857 (Ct.App.2009). In so ruling, the court found: (1) the DJ action was ripe for adjudication; (2) Eadon constituted an insured under the policy as he was involved in the procurement of the contract with Rhodes and Piedmont; (3) there was an “occurrence” under the policy because the property damages were the result of the unexpected happening of the sign falling; (4) the policy covered the costs associated with Rhodes's required removal of the final sign as well as the diminution of value to Rhodes's property due to the loss of his permits to erect signs in the future; and (5) none of the policy exclusions relied on by Auto–Owners precluded coverage as the majority of the damages sought by Rhodes were to his business, rather than the actual work product (the signs of C & B), which was properly excluded. Id. at 93–108, 682 S.E.2d at 863–71. Additionally, the court vacated the portions of the judge's order that referenced the jury, verdict, and damages in the tort action as they were “moot in view of the reversal of that verdict.” Id. at 96, 682 S.E.2d at 864. This Court granted Auto–Owners' petition for a writ of certiorari to review the decision of the Court of Appeals.
In analyzing this case, we must answer the threshold question of whether the reversal of the underlying tort action affected the propriety of the DJ action. If the requisite judicial controversy is present, we must next determine whether Eadon is an “insured” under the provisions of the policy. If so, then the question becomes whether Auto–Owners is legally obligated to pay for damages arising out of the tort action. In assessing Auto–Owners' duty to indemnify Eadon, we must determine whether there was an “occurrence” that caused “property damages,” which were not excluded by any policy provision. We answer “yes” to all of these questions.
“A suit for declaratory judgment is neither legal nor equitable, but is determined by the nature of the underlying issue.” Felts v. Richland County, 303 S.C. 354, 356, 400 S.E.2d 781, 782 (1991). “When the purpose of the underlying dispute is to determine whether coverage exists under an insurance policy, the action is one at law.” Crossmann Cmtys. of N.C., Inc. v. Harleysville Mut. Ins. Co., 395 S.C. 40, 46, 717 S.E.2d 589, 592 (2011) (citation omitted).
“In an action at law tried without a jury, the appellate court will not disturb the trial court's findings...
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