BCS Ins. Co. v. Big Thyme Enters., Inc.
| Decision Date | 14 February 2013 |
| Docket Number | C/A No.: 3:12-CV-933-JFA |
| Court | U.S. District Court — District of South Carolina |
| Parties | BCS Insurance Company, Plaintiff, v. Big Thyme Enterprises, Inc.; David A. Crotts & Associates, Inc.; and David A. Crotts, Defendants. David A. Crotts & Associates, Inc. and David A. Crotts, Counter Claimants, v. BCS Insurance Company, Counter Defendant. |
This matter comes before the court on a motion for summary judgment filed by Plaintiff BCS Insurance Company ("BCS"). All of the Defendants oppose the motion. For the reasons that follow, this court hereby grants the motion for summary judgment.
This declaratory judgment action concerns an insurance policy—specifically, it concerns the Agents and Brokers Professional Liability Policy Number AEO29392 ("the Policy" or "the BCS Policy"), which BCS issued to the Agents of Blue Cross and Blue Shield of South Carolina, effective August 1, 2011 through August 1, 2012. Defendants David A. Crotts and David A. Crotts & Associates, Inc. (collectively, "the CrottsDefendants") are Insureds under the Policy. In addition to being Defendants in the instant case, the Crotts Defendants are also defendants in a state action ("the underlying case") brought by Defendant Big Thyme Enterprises, Inc. ("Big Thyme"). In the underlying case, Big Thyme has alleged that the Crotts Defendants violated the Telephone Consumer Protection Act, 47 U.S.C. § 227 (the "TCPA") by sending unsolicited facsimile advertisements. Big Thyme claims that it is entitled to statutory damages of $500 per violation (which can be tripled under the TCPA if the violation was willful or knowing). Additionally, Big Thyme alleges that the Crotts Defendants committed conversion by wrongfully misappropriating its paper, fax machines, toner, and employee time. Though BCS has been providing a defense for the Crotts Defendants in the underlying case, it has done so under a reservation of rights. In this declaratory judgment action, BCS seeks a declaration regarding its rights and obligations under the Policy. Big Thyme has filed a counterclaim asking the court to find that BCS has a duty to continue providing a defense in the underlying case and to indemnify the Crotts Defendants in the event they are found liable.
On October 5, 2012, BCS filed their Motion for Summary Judgment. The Crotts Defendants and Big Thyme filed separate Responses in Opposition on November 5, 2012, and BCS replied to those responses in a single brief on November 16, 2012.
Rule 56(a) of the Federal Rules of Civil Procedure provides that summary judgment shall be rendered when a moving party has shown that "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law."The court must determine whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986). Summary judgment should be granted in those cases where it is perfectly clear that there remains no genuine dispute as to material fact and inquiry into the facts is unnecessary to clarify the application of the law. McKinney v. Bd. of Trustees of Mayland Community College, 955 F.2d 924, 928 (4th Cir. 1992). In deciding a motion for summary judgment, "the judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Anderson, 477 U.S. at 249.
To determine an insurance policy's coverage in a declaratory judgment action under South Carolina law, a court should compare the complaint in the underlying action with language of the policy to see whether the complaint alleges any facts that could possibly bring the action within coverage of the policy. Jefferson-Pilot Fire & Cas. Co. v. Sunbelt Beer Distributors, Inc., 839 F. Supp. 376 (D.S.C. 1993). Where a motion for summary judgment presents a question as to the construction of a written contract, the question is one of law if the language employed by the agreement is plain and unambiguous. MGC Mgmt. of Charleston, Inc. v. Kinghorn Ins. Agency, 520 S.E.2d 820, 822 (S.C. Ct. App. 1999). Ambiguous or conflicting terms in an insurance policy must be construed liberally in favor of the insured and strictly against the insurer. Cincinnati Ins. Co. v. Urgent Care Pharmacy, Inc., 413 F. Supp.2d 644, 647 (D.S.C. 2006). Rules of construction of an insurance policy require clauses of exclusion to be narrowly interpreted and clauses of inclusion to be broadly construed. Auto-Owners Ins. Co. v.Madison at Part West Prop. Owners Assoc., 834 F.Supp.2d 437, 443 (D.S.C. 2011). In interpreting insurance policies, courts should consider constructions of policies that "permit a sensible and reasonable interpretation rather than one that will lead to absurd consequences or unjust results." In re Georgetown Steel Co., LLC v. Capital City Ins. Co., 318 B.R. 313, 321 (D.S.C. 2004).
In summarizing the reasons that it is entitled to summary judgment, BCS offers the following:
[T]he court need not look past the plain and unambiguous BCS policy language to conclude that the Crotts Defendants are not entitled to coverage because: (1) the underlying case does not allege that the Crotts Defendants rendered or failed to render a "Professional Service" as defined in the Policy and as understood by well settled law; (2) Big Thyme is not a "Client" of [the] Crotts [Defendants;] and (3) the statutory penalties sought by Big Thyme do not constitute "Loss." Likewise, Big Thyme's conversion claim is an expressly excluded form of "property damage." In addition, the affirmative defenses alleged by Big Thyme do not create coverage for the Crotts Defendants where it does not exist under the Policy.
(ECF No. 48-1, p. 2). The Defendants disagree that any of these reasons entitles BCS to summary judgment.
The policy at issue in this case is a professional liability policy, which does not provide coverage for property damage or advertising injury, as opposed to a commercial general liability policy, which does provide such coverage. Specifically, the BCS Policy covers "Loss and Defense Expenses resulting from any Claim . . . ." Claim is defined to include "any notice received by an Insured that any person or entity intends to hold such Insured responsible for a Wrongful Act involving Professional Services." Wrongful Actis defined to mean "any actual or alleged negligent act, error or omission in the rendering or failure to render Professional Services by an Insured to or for a Client, solely in his or her capacity as a licensed Life . . . Insurance Agent . . . ." Finally, Professional Services are defined as "specialized services rendered to a Client as a licensed Life, Accident and Health Insurance Agent."
BCS contends that the Professional Services covered by the BCS Policy do not include the activities alleged in the underlying case. "There is simply nothing about unsolicited faxed advertising to non-clients that calls upon the Crotts Defendants' specialized knowledge or training as an insurance agent or agency." (ECF No. 48-1, p. 10). As examples of activities that would constitute Professional Services of an Insurance Agent, BCS lists the following: meeting with clients to discuss their insurance needs; counseling clients on the products best suited to such needs; obtaining competing bids from insurance companies; completing insurance applications with clients; procuring coverage; and renewing, cancelling, or consulting about premium charges. Simply put, BCS does not believe that sending unsolicited advertising faxes constitutes Professional Services under the...
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