Bartlett v. Nationwide Mut. Fire Ins. Co., 0788

• Decision Date: 18 June 1986
• Docket Number: No. 0788,0788
• Citation: 348 S.E.2d 530,290 S.C. 154
• Court: South Carolina Court of Appeals
• Parties: J. Frank BARTLETT, III, Appellant, v. NATIONWIDE MUTUAL FIRE INSURANCE COMPANY, Respondent. . Heard

Page 530

348 S.E.2d 530

290 S.C. 154

J. Frank BARTLETT, III, Appellant, v. NATIONWIDE MUTUAL FIRE INSURANCE COMPANY, Respondent.

No. 0788.

Court of Appeals of South Carolina.

Heard June 18, 1986.

Decided Sept. 2, 1986.

William O. Kneece and Edgar S. Kneece, Columbia, for appellant.

Robert A. McKenzie, Columbia, for respondent.

BELL, Judge:

This appeal involves a claim for bad faith refusal to pay first party benefits under a contract of insurance. The plaintiff, J. Frank Bartlett, sued Nationwide Mutual Fire Insurance Company, alleging two causes of action: (1) breach of contract; and (2) bad faith refusal to pay benefits due under a contract of insurance. Nationwide moved to strike the allegations of bad faith refusal to pay on the ground that Nichols v. State Farm Mutual Automobile Insurance Co., 279 S.C. 336, 306 S.E.2d 616 (1983), did not apply to claims arising prior to the decision in that case. The circuit court granted the motion to strike on the ground that Nichols was not to be given retroactive effect, because it created a new cause of action not previously recognized in South Carolina. Bartlett did not appeal this ruling.

Subsequently, Bartlett filed an amended complaint in which he alleged two causes of action: (1) breach of contract; and (2) the cause of action described in Brown v. South Carolina Insurance Co., 284 S.C. 47, 324 S.E.2d 641 (Ct.App.1984), cert. dismissed 290 S.C. 154, 348 S.E.2d 530 (1985). Nationwide again moved to strike the second cause of action. The circuit court granted the motion to strike, holding that Bartlett had realleged the same cause of action which was stricken from his original complaint. Bartlett appeals from this second order on the ground that the cause of action in Nichols and the cause of action in Brown are different causes of action. We affirm the circuit court's ruling on the second motion to strike.

During the pendency of this appeal, the Supreme Court ruled that Nichols is applicable to claims arising before the decision in that case. See York v. State Farm Mutual Automobile Insurance Co., 287 S.C. 164, 337 S.E.2d 210 (1985). The Court noted that its holding in York was implicit in its prior decision in Carter v. American Mutual Fire Insurance Co., 279 S.C. 367, 307 S.E.2d 225 (1983), and also in the decision of this Court in Brown v. South Carolina Insurance Co., supra.

In light of York, Carter, and Brown, the circuit court's ruling that Nichols does not apply to Bartlett's claim is plainly erroneous. However, Bartlett did not raise the issue of retrospective application of Nichols in the circuit court nor in any exception on appeal. Thus, the judge's ruling is now the law of the case. Burris v. Electro Motive Manufacturing Co., 247 S.C. 579, 148 S.E.2d 687 (1966). This Court will not reverse a trial court ruling on the ground of plain error appearing in the record; we are free to reverse only when error is properly preserved in the trial court and properly presented by an exception on appeal. See Ellison v. Heritage Dodge, Inc., 283 S.C. 21, 320 S.E.2d 716 (Ct.App.1984). Accordingly, we address only the question presented by Bartlett's exceptions: whether the Brown decision recognized a different cause of action from Nichols.

In a landmark decision, our Supreme Court held in Nichols v. State Farm Mutual Automobile Insurance Co., supra, that if an insured can demonstrate bad faith or unreasonable refusal by an insurer to pay first party benefits due under a mutually binding insurance contract, he can recover damages not limited to the face amount of the contract; and if the insurer's actions are willful or in reckless disregard of the insured's rights under the contract, he can recover punitive damages.

We noted in Brown v. South Carolina Insurance Co., supra, 284 S.C. at 55, n. 4, 324 S.E.2d at 646-647, n. 4, that although the Nichols opinion described the cause of action for bad faith refusal to pay as a tort action, it was more consistent with later Supreme Court decisions applying Nichols to regard it as an action in contract on an implied covenant of good faith and fair dealing. The subsequent decision in York v. State Farm, supra, lends further weight to this view, because it cites Brown with approval and, more importantly,...