City of Hartsville v. S.C. Mun. Ins. & Risk Financing Fund, 26625.

CourtUnited States State Supreme Court of South Carolina
Citation382 S.C. 535,677 S.E.2d 574
Decision Date18 May 2009
Docket NumberNo. 26625.,26625.
677 S.E.2d 574
382 S.C. 535
No. 26625.
Supreme Court of South Carolina.
Heard March 4, 2009.
Re-filed May 18, 2009.

[677 S.E.2d 575]

J.R. Murphy and Jeffrey C. Kull, both of Murphy & Grantland, of Columbia, for Appellant.

Martin S. Driggers, of Driggers & Moyd, of Hartsville, for Respondent.

Justice BEATTY.

In this declaratory judgment action, South Carolina Municipal Insurance and Risk Financing Fund (Insurer) appeals the circuit court's order finding the Insurer had a continuing duty to defend the City of Hartsville (City) and ordering it to pay the City the costs it incurred from having to defend against a suit brought by a Hartsville landowner. Pursuant to Rule 204(b), SCACR, this Court certified this appeal from the Court of Appeals. We affirm the decision of the circuit court.

677 S.E.2d 576

In 1991, Phelix Byrd (Byrd) purchased a 46.358 acre tract of land that lay partly in the City (the City tract) and partly in Darlington County (the County tract). The property was part of what used to be Coker Farms, a National Historic Landmark (NHL) as designated in 1964 by the National Park Service, a division of the United States Department of the Interior. This NHL designation, however, was never filed in the public records of Darlington County nor was any mention of the designation placed on deeds conveying portions of the Coker Farms properties to subsequent purchasers.

Byrd purchased a portion of the Coker Farms property in order to subdivide it and sell parcels to developers for commercial purposes. In 1998, Byrd approached the City about developing a carwash on a .86 acre parcel of the property located in the City. Because the City tract was zoned for agricultural use, Byrd petitioned the City to rezone it as commercial. Fearing that commercial development of any part of the Coker Farms would lead to the revocation of the NHL designation for all of Coker Farms, the City delayed acting on Byrd's petition.

After being assured that rezoning Byrd's property would not affect the NHL designation, the City rezoned the .86 acre parcel from agricultural to commercial pursuant to a City ordinance in February of 1999. By this time, however, Byrd's potential purchaser had lost the financing necessary to develop the property and, as a result, the sale never closed.

In July 1999, the City passed another ordinance which rezoned as commercial the balance of Byrd's property located within the City.

Shortly thereafter, Byrd entered into contracts to sell parcels of the City tract for development. These sales, however, were not consummated because Darlington County, which maintained the records for both County and City property, would not approve the deeds. The County declined to approve the deeds on the ground the tax records for Byrd's property contained "flags," which stated "N'tl Park Serv. Ord/No Per or Deeds Issued" and, in turn, effectively restricted the issuance of deeds. The County had placed these flags on the tax records for all Coker Farms property in an attempt to protect the NHL designation. The flags were not removed from Byrd's tax records until approximately three years after the City tract had been rezoned.

In 2000, Byrd sued the City and the County, in addition to several other defendants, for damages arising from Byrd's difficulties and delays in being able to commercially develop his Coker Farms properties. In terms of his claims against the City, Byrd specifically pled causes of action for "gross negligence"1 and "taking or inverse condemnation."

The City, represented by the Insurer,2 moved for summary judgment on all of Byrd's claims. By order dated February 22, 2002, the circuit court granted the City's motion with respect to Byrd's takings and gross negligence claims. The court, however, denied the motion regarding Byrd's cause of action for inverse condemnation.

On March 28, 2002, the Insurer withdrew its defense of the City on the ground the remaining cause of action against the City for inverse condemnation was specifically excluded

677 S.E.2d 577

under the terms of the liability insurance policy the Insurer issued to the City.3 The City protested the Insurer's withdrawal and requested that it continue to defend the City due to its concerns that the circuit court could permit Byrd to amend his complaint to add claims covered by the Insurer's liability policy. Despite this protest, the Insurer denied its duty to defend but indicated that it would reconsider its position in the event Byrd was permitted to reinstate the negligence cause of action. After the Insurer withdrew its defense, the City retained its own counsel.

Subsequently, the City filed a second motion for summary judgment with respect to Byrd's inverse condemnation claim. At the hearing on this motion, Byrd conveyed his theory that officials with the City and the County "conspired to have Darlington County `flag' [his] property so that it could not be sold."

By order dated September 11, 2002, the circuit court granted the City's motion concerning the inverse condemnation cause of action, but denied the motion "with respect to the claim that the City of Hartsville has conspired with the County of Darlington in its actions." In so holding, the court reasoned:

[A]s to the allegation by [Byrd] that the City of Hartsville was involved with the County in "flagging" the property, it would be inappropriate, at this time, for Summary Judgment to be granted. However, with respect to any independent acts by the City of Hartsville Officials, the Court finds that Summary Judgment would be appropriate as to those allegations.

Ultimately, on March 20, 2003, the circuit court dismissed the City as a defendant in Byrd's lawsuit. In reaching this decision, the court concluded that "South Carolina Code Section 15-78-60(17), as amended, grants immunity to the City of Hartsville for actions taken by its employees, even if proved, which would have involved an intent to harm Mr. Byrd, the Plaintiff, as it is claimed to have conspired with County employees." In its order denying Byrd's motion for reconsideration, the circuit court stated:

In its Motion for Reconsideration, [Byrd] contends that these actions by the City of Hartsville, working along side the County of Darlington, would be independent conduct by the City of Hartsville, constituting inverse condemnation. The Court, however, concludes that this would be evidence of a conspiracy and, thus, is in fact, a tort and not a contract and is, thus, barred by the aforementioned Statute. As previously stated, the Court had already concluded in its Order of September 11, 2002, which was unappealed, that there were no independent acts or conduct by the City of Hartsville which would support an inverse condemnation claim.

Byrd appealed to the Court of Appeals. This Court certified the appeal pursuant to Rule 204(b), SCACR. In Byrd v. City of Hartsville,4 365 S.C. 650, 620 S.E.2d 76 (2005), this Court affirmed the circuit court's orders, holding: (1) the conspiracy claim was not before the Court given Byrd did not appeal from the circuit court's decision that the City would be immune from liability under the Tort Claims Act even if there were a conspiracy; and (2) summary judgment in favor of the City was proper because Byrd could not demonstrate that the City inversely condemned his property through regulatory delay.

While Byrd's appeal was pending, the City filed this declaratory judgment action against the Insurer to recover all costs incurred by the City in defending against Byrd's lawsuit after the Insurer withdrew its defense. Specifically, the City claimed the Insurer breached its contract of insurance with the City "while covered claims against [the City], including a tort claim for conspiracy, was still

677 S.E.2d 578

being litigated." Based on this alleged breach of contract, the City claimed it was entitled to be reimbursed for the costs and expenses of having to defend against the Byrd lawsuit since March 28, 2002, through the appeal. In response, the Insurer denied liability to the City on the ground that all claims which remained against the City after the February 22, 2002 order, including the conspiracy claim, were not covered by the liability policy issued to the City.

After a hearing, the circuit court ruled in favor of the City by order dated May 10, 2007. In reaching this decision, the court found: (1) Byrd's conspiracy claim against the City was a tort action that was separate from the cause of action for inverse condemnation; and (2) the conspiracy claim, a common law tort action, was not specifically excluded by the Tort Claims Act. Based on these findings, the court concluded the Insurer was contractually bound to defend the City against all tort claims, including the conspiracy claim. As a result, the court ordered the Insurer to reimburse the City for its defense costs in the amount of $17,642.55.

The Insurer appeals the circuit court's decision.


The Insurer argues the circuit court erred in finding it had a continuing duty to defend the City after the cause of action for negligent misrepresentation was dismissed. The Insurer claims its duty to defend terminated at this point because any remaining duty to defend the City was based on the specifically-excluded inverse condemnation claim. The Insurer contends the remaining civil conspiracy cause of action did not "trigger" a duty to defend because the claim: (1) was not specifically pled by Byrd; (2) arose from the same alleged acts of the City as the inverse condemnation claim and was, therefore, subject to the same exclusion in the liability policy; and (3) constitutes an intentional tort which is barred by sovereign immunity under section 15-78-60 of the Tort Claims Act.

"A suit for declaratory judgment is neither legal nor equitable, but is determined...

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