Dudek v. Commonwealth Land Title Ins. Co.

• Decision Date: 12 June 2020
• Docket Number: No. 2:19-cv-3237-DCN,2:19-cv-3237-DCN
• Citation: 466 F.Supp.3d 610
• Parties: Stephen DUDEK and Doreen Cross, Plaintiffs, v. COMMONWEALTH LAND TITLE INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — District of South Carolina

466 F.Supp.3d 610

Stephen DUDEK and Doreen Cross, Plaintiffs,

v.COMMONWEALTH LAND TITLE INSURANCE COMPANY, Defendant.

No. 2:19-cv-3237-DCN

United States District Court, D. South Carolina, Charleston Division.

Signed June 12, 2020

Samuel Melvil Wheeler, Smith Closser, North Charleston, SC, Steven L. Smith, Smith and Collins, Charleston, SC, for Plaintiffs.

Demetri K. Koutrakos, Harry Alwyn Dixon, Louis H. Lang, Callison Tighe and Robinson, Columbia, SC, for Defendant.

ORDER

DAVID C. NORTON, UNITED STATES DISTRICT JUDGE

This matter is before the court on plaintiffs Stephen Dudek and Doreen Cross's (collectively, "plaintiffs") motion for partial summary judgment, ECF No. 14, and defendant Commonwealth Land Title Insurance Company's ("Commonwealth") motion for summary judgment, ECF No. 18. For the reasons set forth below, the court denies plaintiffs’ motion and grants Commonwealth's motion.

I. BACKGROUND

This insurance dispute arises from a long-standing and enduring legal battle over a six-acre tract of land in Dorchester County (the "Property"). Most of the relevant facts, including those that follow, are undisputed. The Property was originally part of an eight-acre tract until the original sellers subdivided the land into two parcels, the Property and an adjacent two-acre tract, when they decided to sell the land. In 2012, plaintiffs entered into a contract with the sellers to purchase the Property (the "Purchase Contract"). Shortly after the sellers and plaintiffs signed the Purchase Contract, Molly Morphew ("Morphew") entered into a back-up contract with the sellers, which would place Morphew under contract for the Property in the event that plaintiffs’ Purchase Contract fell through before plaintiffs’ closing date.

At some point prior to the closing date, a dispute arose between the sellers, plaintiffs, and Morphew over who could purchase the Property. It did not take long for that dispute to escalate into litigation. In 2013, plaintiffs and Morphew each sued the sellers for specific performance of their respective contracts in state court. Those suits were consolidated into a single action, state court civil action number 2013-CP-18-00183 (the "2013 Action"). At some point during the litigation, the sellers conveyed the two-acre tract adjacent to the Property to Morphew. Plaintiffs ultimately prevailed in the 2013 Action, and the Dorchester County Master-In-Equity granted plaintiffs specific performance of the Purchase Contract. In 2016, Morphew appealed the Master-In-Equity's ruling and, while her appeal was pending, filed a separate lawsuit in state court related to the sale of the Property, civil action number 2016-CP-18-1706 (the "2016 Action"). On January 11, 2017, the South Carolina Court of Appeals affirmed the Master-In-Equity's ruling in favor of plaintiffs in the 2013 Action. On January 31, 2017, South Carolina Circuit Court Judge Deadra Jefferson dismissed Morphew's complaint in the 2016 Action. Morphew appealed Judge Jefferson's dismissal, and the appeal remains pending.

Finally, on June 5, 2017, plaintiffs closed on the Purchase Contract. At the closing, plaintiffs purchased a title insurance policy (the "Policy") from Commonwealth, which provided plaintiffs with insurance against adverse claims to their title to the Property, subject to various exceptions and exclusions. On June 12, 2017, Morphew, proceeding pro se, filed another lawsuit against plaintiffs in state court (the "2017 Action"), requesting that the court place the Property in a constructive trust based on plaintiffs’ alleged abuse of process and fraud during the 2013 and 2016 Actions. Plaintiffs retained counsel to represent them in the 2017 Action, and on February 20, 2018, South Carolina Circuit Court Judge Diane Goodstein dismissed Morphew's complaint, finding that her claims were either not cognizable under SCRCP 12(b)(8) or barred by the doctrine of res judicata. Morphew appealed that decision, and the appeal remains pending.

After dismissal of the 2017 Action, on September 19, 2018, Morphew filed yet another lawsuit against plaintiffs in state court (the "2018 Action") seeking to enforce a provision of the Purchase Contract that purports to grant a water and sewer easement to the adjacent two-acre property, now owned by Morphew, and seeking damages for various torts she alleges against plaintiffs. Plaintiffs moved to dismiss Morphew's complaint in the 2018 Action, and that motion remains pending. On April 25, 2019, plaintiffs tendered notice of the 2018 Action to Commonwealth and demanded that Commonwealth provide them with a defense. On April 29, 2019, plaintiffs updated their demand, requesting that Commonwealth assume the defense of the 2017 Action as well, in the event that the 2017 Action proceeds beyond the pending appeal. On April 30, 2019, Commonwealth denied plaintiffs’ claims and refused to provide a defense to the 2018 Action, relying on two exclusions contained in the Policy.

On October 8, 2019, plaintiffs filed the instant lawsuit against Commonwealth in the Dorchester County Court of Common Pleas, alleging breach of the insurance contract and bad faith. ECF No. 1-1. On November 15, 2019, Commonwealth removed the matter to this court, based on the court's diversity jurisdiction over the subject matter. ECF No. 1. On March 25, 2020, plaintiffs filed a motion for partial summary judgment on the issue of Commonwealth's duty to defend. ECF No. 14. On April 15, 2020, Commonwealth responded to the motion, ECF No. 17, and filed its own motion for summary judgment, ECF No. 18. On April 21, 2020, plaintiffs responded to Commonwealth's motion, ECF No. 19, incorporating arguments they asserted in their motion for partial summary judgment. On April 28, 2020, Commonwealth replied. ECF No. 20. Plaintiffs did not file a reply with respect to their motion for partial summary judgment, and the time to do so has now expired. As such, the motions are now ripe for the court's consideration.

II. STANDARD

Summary judgment shall be granted "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). Rule 56(c) of the Federal Rules of Civil Procedure requires that the district court enter judgment against a party who, " ‘after adequate time for discovery ... fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.’ " Stone v. Liberty Mut. Ins. Co., 105 F.3d 188, 190 (4th Cir. 1997) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ). "[T]his standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Id. at 248, 106 S.Ct. 2505. "[S]ummary judgment will not lie if the dispute about a material fact is ‘genuine,’ that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id.

"[A]t the summary judgment stage 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." Id. at 249, 106 S.Ct. 2505. When the party moving for summary judgment does not bear the ultimate burden of persuasion at trial, it may discharge its burden by demonstrating to the court that there is an absence of evidence to support the non-moving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The non-movant must then "make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Id. at 322, 106 S.Ct. 2548.

Any reasonable inferences are to be drawn in favor of the nonmoving party. Anderson, 477 U.S. at 255, 106 S.Ct. 2505, Webster v. U.S. Dep't of Agric., 685 F.3d 411, 421 (4th Cir. 2012). However, to defeat summary judgment, the nonmoving party must rely on more than conclusory allegations, mere speculation, the building of one inference upon another, or the mere existence of a scintilla of evidence. See Anderson, 477 U.S. at 252, 106 S.Ct. 2505 ; Stone, 105 F.3d at 191. Rather, "a party opposing a properly supported motion for summary judgment ... must ‘set forth specific facts showing that there is a genuine issue for trial.’ " Bouchat v. Baltimore Ravens Football Club, Inc., 346 F.3d 514, 522 (4th Cir. 2003) (quoting Fed. R. Civ. P. 56(e) (2002) (amended 2010)). If the adverse party fails to provide evidence establishing that the fact finder could reasonably decide in his favor, then summary judgment shall be entered "regardless of ‘[a]ny proof or evidentiary requirements imposed by the substantive law.’ " Id. (quoting Anderson, 477 U.S. at 248, 106 S.Ct. 2505 ).

III. DISCUSSION

In their motion, plaintiffs ask the court to find that Commonwealth has a duty to defend plaintiffs in both the 2017 Action and 2018 Action as a matter of law. In response, Commonwealth asks this court to deny plaintiffs’ motion, find that it does not have a duty to defend plaintiffs in either the 2017 Action or the 2018 Action, and grant summary judgment in its favor on both of plaintiffs’ claims. The court addresses Commonwealth's duty to defend plaintiffs with respect to each underlying action in turn. Before delving into the substance of the matter, however, the court first reviews the applicable canons of South Carolina insurance law.

A. South Carolina Insurance Law

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