Columbia Ins. Co. v. Reynolds

Decision Date11 April 2016
Docket NumberCivil Action No. 2:14–4739–RMG
Citation225 F.Supp.3d 375
CourtU.S. District Court — District of South Carolina
Parties COLUMBIA INSURANCE COMPANY, Plaintiff, v. William Edmund REYNOLDS, Jr., Angela D. Reynolds, and Christopher Kamil Waymer, individually and d/b/a Q. E. Trucking, Defendants.

Allen Mattison Bogan, Brian P. Crotty, Mitchell C. Brown, Nelson Mullins Riley and Scarborough (COLA), Columbia, SC, for Plaintiff.

Matthew V. Creech, Peters Murdaugh Parker Eltzroth and Detrick, Ridgeland, SC, Mark B. Tinsley, Gooding and Gooding, Allendale, SC, for Defendant.


Richard Mark Gergel, United States District Judge

This matter is before the Court on Plaintiff's motion for a protective order (Dkt. No. 31), Plaintiff's motion for partial summary judgment (Dkt. No. 32), Defendant's second motion to compel (Dkt. No. 33), Plaintiff's first motion to compel (Dkt. No. 34), Defendants' motion to dismiss (Dkt. No. 52), Plaintiff's motion for summary judgment (Dkt. No. 54), and Plaintiff's second motion to compel (Dkt. No. 58). For the reasons set forth below, the Court grants Defendants' motion to dismiss. The dismissal terminates all other pending motions.

I. Background

On the night of December 16, 2013, Defendant William Reynolds was driving on Highway 17 in Colleton County, South Carolina, with his wife, Defendant Angela Reynolds (together, the "Reynolds") as a passenger. (Dkt. No. 36 at 1, Feb. 19, 2016 (Defs.' Resp. Opp'n Partial Summ. J.).) Defendant Christopher Waymer was driving a tractor-trailer loaded with logs on Woods Road. (Id. ) Mr. Waymer pulled his truck into the intersection of Highway 17 and Woods Road, and the Reynolds' vehicle struck the right side of his trailer. (Id. ) The Reynolds were severely injured and their vehicle was a total loss. (Id. at 1, ex. E.) Mr. Waymer was covered by a $1 million commercial liability insurance policy with Plaintiff Columbia Insurance Company ("CIC"). (Dkt. No. 54 at 2, Mar. 1, 2016 (Pls. Mot. Summ. J.).) The parties agree that Mr. Waymer's negligence was a cause of the accident and that the Reynolds' damages exceed $1 million. (See Dkt No. 61 at 15, Mar. 10, 2016 (Pls. Resp. Opp'n Mot. Dismiss) (hereinafter "Opp'n").) Mr. Waymer, however, has reserved the defense of comparative negligence, and the amount of his liability is disputed.1 (Id. )

O.W. Ray, of the James C. Greene Company, an independent adjusting company, investigated the accident on behalf of CIC. (Dkt. No. 36 at ex. C.) The Reynolds retained counsel on December 30, 2013. (Id. ) On January 23, 2014, counsel for the Reynolds sent a demand letter to Mr. Ray, offering to settle for the full amount of the policy limit. (Opp'n 2.) The settlement offer was time-limited to expire in ten business days. (Dkt. No. 52–1 at 2, Mar. 1, 2016 (Mem. Supp. Mot. Dismiss) (hereinafter "Mem.").) James Saleeby, an attorney retained by CIC, responded, stating that CIC did not have sufficient information to pay the claim. (Opp'n 2.) The settlement offer expired on February 6, 2014. (Mem. 2.)

On April 4, 2014, Mr. and Mrs. Reynolds each filed a tort action against Mr. Waymer in the Colleton County Court of Common Pleas. Reynolds v. Waymer , 2014CP1500273 & 2014CP1500274 (S.C.C.P. 2014) (the "Underlying Actions"). Mr. Waymer is represented by Mr. Saleeby in the Underlying Actions. On April 28, 2014, CIC tendered the full policy limit as a settlement offer. The Reynolds declined that offer and, on May 21, 2014, made a new settlement offer. (Opp'n 3.) The Reynolds offered to release Mr. Waymer if CIC agreed to litigate the issue of whether CIC acted negligently or in bad faith by not accepting the January 23, 2014 settlement offer. (Id. at 3–4). If CIC agreed, the Reynolds would settle their claims for $1 million (the policy limit) if CIC prevailed on the bad faith issue, and for either $3.5 million or a jury-determined amount (CIC's choice) if the Reynolds prevailed. (Id. ) CIC declined that offer. (Id. at 4.)

Per state records, mediation in the Underlying Actions occurred from October 31, 2014 to April 17, 2015. On December 16, 2014, CIC filed the present action, naming the Reynolds and Mr. Waymer as Defendants. (Dkt. No. 1.) CIC seeks a declaration (1) that the Reynolds' January 23, 2014 demand for payment of the policy limit was unreasonable, (2) that CIC's inability to respond to that demand within the imposed deadline did not amount to bad faith or negligence, and (3) that CIC's April 28, 2014 tender of the full amount of the policy limits was reasonable and was made in good faith. (Id. ¶¶ 40—41.) Defendants answered on February 20, 2015. In their answer, Defendants assert a counterclaim seeking a declaration (1) that CIC mishandled the Reynolds' claims against Mr. Waymer, (2) that CIC acted in bad faith, and (3) that CIC must indemnify Mr. Waymer for the full value of the Reynolds' damages. (Dkt. No. 6.) On June 11, 2015, the Underlying Actions were stayed on motion of the Reynolds.

Numerous motions are now pending in the present action. CIC has moved for partial summary judgment regarding Defendants' counterclaim (Dkt. No. 32) and for summary judgment regarding its own claim (Dkt. No. 54). Defendants have moved to dismiss for lack of subject-matter jurisdiction, arguing that the case is not ripe for adjudication because it is not yet known whether Mr. Waymer will face a verdict in excess of CIC's policy limits. (Dkt. No. 52.) Also pending are four discovery-related motions: CIC's motion for a protective order regarding certain deposition questions (Dkt. No. 31), Defendants' second motion to compel (Dkt. No. 33), CIC's first motion to compel (Dkt. No. 34), and CIC's second motion to compel (Dkt. No. 58).

II. Legal Standard
A. Rule 12(1) and Ripeness

Subject matter jurisdiction in federal courts is limited to actual cases or controversies as defined by Article III of the United States Constitution. Campbell–Ewald Co. v. Gomez , ––– U.S. ––––, 136 S.Ct. 663, 669, 193 L.Ed.2d 571 (2016). "The ‘ripeness' requirement originates in the ‘case or controversy’ constraint of Article III, and presents a ‘threshold question [ ] of justiciability.’ " Scoggins v. Lee's Crossing Homeowners Ass'n , 718 F.3d 262, 269 (4th Cir. 2013) (quoting Lansdowne on the Potomac Homeowners Ass'n, Inc. v. OpenBand at Lansdowne, LLC , 713 F.3d 187, 195 (4th Cir. 2013) ). "A claim is not ripe for adjudication if it rests upon contingent future events that may not occur as anticipated, or indeed may not occur at all." Texas v. United States , 523 U.S. 296, 300, 118 S.Ct. 1257, 140 L.Ed.2d 406 (1998) (citation and internal quotation marks omitted). The purpose of the ripeness doctrine is to "prevent the courts, through premature adjudication, from entangling themselves in abstract disagreements." Permanent Gen. Assurance Corp. v. Moore , 341 F.Supp.2d 579, 581 (D.S.C. 2004) (quoting Abbott Labs. v. Gardner , 387 U.S. 136, 148, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967) ). "The issue of ripeness entails an analysis considering the fitness of the issues before the court, as well as the hardship that the parties will experience if the court withholds consideration of the dispute." Scoggins , 718 F.3d at 270.

In ruling on a motion to dismiss for lack of subject-matter jurisdiction, the court "regard[s] the pleadings' allegations as mere evidence on the issue, and may consider evidence outside the pleadings without converting the proceeding to one for summary judgment." Richmond, Fredericksburg & Potomac R.R. Co. v. United States , 945 F.2d 765, 768 (4th Cir. 1991). "The moving party should prevail only if the material jurisdictional facts are not in dispute and the moving party is entitled to prevail as a matter of law." Id. (citation omitted).

B. Declaratory Judgment Act

Under the Declaratory Judgment Act, a district court, in a case or controversy otherwise within its jurisdiction, "may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." 28 U.S.C. § 2201(a). The Supreme Court has "repeatedly characterized the Declaratory Judgment Act as ‘an enabling Act, which confers a discretion on the courts rather than an absolute right upon the litigant.’ " Wilton v. Seven Falls Co. , 515 U.S. 277, 287, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995) (quoting Pub. Serv. Comm'n of Utah v. Wycoff Co. , 344 U.S. 237, 241, 73 S.Ct. 236, 97 L.Ed. 291 (1952) ). "[A] declaratory judgment action is appropriate ‘when the judgment will serve a useful purpose in clarifying and settling the legal relations in issue, and ... when it will terminate and afford relief from the uncertainty, insecurity, and controversy giving rise to the proceeding.’ " Centennial Life Ins. Co. v. Poston , 88 F.3d 255, 256 (4th Cir. 1996) (quoting Aetna Cas. & Sur. Co. v. Quarles , 92 F.2d 321, 325 (4th Cir. 1937) ). But "a declaratory judgment action does require an actual controversy; the party seeking the declaratory judgment must ‘show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.’ Id. (quoting Md. Cas. Co. v. P. Coal & Oil Co. , 312 U.S. 270, 273, 61 S.Ct. 510, 85 L.Ed. 826 (1941) ).

Even where a declaratory action presents an issue ripe for adjudication, a district court, in its discretion, may elect to abstain from hearing the action2 Wilton , 515 U.S. at 282–83, 115 S.Ct. 2137 ("[D]istrict courts possess discretion in determining whether and when to entertain an action under the Declaratory Judgment Act, even when the suit otherwise satisfies subject matter jurisdictional prerequisites." ). In deciding whether to abstain, "a district court should examine "the scope of the pending state court proceeding and the nature of defenses open there." Id. (quoting Brillhart v. Excess Ins. Co. of Am. , 316 U.S. 491, 495, 62 S.Ct. 1173, 86 L.Ed. 1620 (1942) ). "[W]here...

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  • Am. Serv. Ins. Co. v. OnTime Transp., LLC
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    • August 22, 2019
    ...of any interested party seeking such declaration, whether or not further relief is or could be sought.'" Columbia Ins. Co. v. Reynolds, 225 F. Supp. 3d 375,379 (D.S.C. 2016) (quoting 28 U.S.C. § 2201(a)). "[A] declaratory judgment action is appropriate 'when the judgment will serve a useful......
  • Waymer v. Columbia Ins. Co.
    • United States
    • U.S. District Court — District of South Carolina
    • August 7, 2019
    ...during the pending State Court Actions, and alternatively dismissed the case on abstention grounds. See Columbia Ins. Co. v. Reynolds, 225 F. Supp. 3d 375 (D.S.C. 2016). After a damages hearing was held on October 24, 2018 in the State Court Actions, CIC alleges that it was determined that ......
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    • August 7, 2019
    ...during the pending State Court Actions, and alternatively dismissed the case on abstention grounds. See Columbia Ins. Co. v. Reynolds, 225 F. Supp. 3d 375 (D.S.C. 2016). Notably, CIC alleges that before the resolution of the 2014 Action Waymer shared the defense file of his CIC-provided cou......

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