Hartsel v. Selective Ins. Co. of South Carolina
| Decision Date | 18 May 2011 |
| Docket Number | Unpublished Opinion No. 2011-UP-226 |
| Parties | Norman C. Hartsel, as Personal Representative of the Estate of Bennett W. Hartsel, Norman C. Hartsel, as Personal Representative of the Estate of Mary E. Hartsel, and Norman C. Hartsel, Individually, Appellants, v. Selective Insurance Company of South Carolina, Respondent. |
| Court | Court of Appeals of South Carolina |
THIS OPINION HAS NO PRECEDENTIAL VALUE. IT SHOULD NOT BE CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING EXCEPT AS PROVIDED BY RULE 268(d)(2), SCACR.
Appeal From Charleston County
R. Markley Dennis, Jr., Circuit Court Judge
AFFIRMED
Michael S. Seekings, of Charleston, for Appellants.
William L. Howard and Russell G. Hines, both of Charleston, for Respondent.
The plaintiff filed this lawsuit against Selective Insurance Company in three separate capacities alleging the violation of three distinct duties in five different causes of action. We agree with the circuit court that none of them are actionable in this case as a matter of law. We affirm the circuit court's order granting the motion to dismiss.
Bennett Hartsel ("Bennett") and Brett Jones ("Jones") were tragically killed in a one-car accident. The families were uncertain initially as to which of the young men was driving, and each estate filed a lawsuit against the other for wrongful death and survival. The car was insured by Selective Insurance Company. Selective hired an engineer who concluded that Jones was driving. Selective settled the lawsuit by Jones' estate against Bennett's estate ("the Jones action") for $185,000.00. The parties reached a high/low settlement agreement[1] on Bennett's estate's claim against Jones' estate ("Bennett's action"), and the case proceeded to trial. The jury returned a verdict for $50,000.00.
Bennett's father Norman C. Hartsel ("Norman") filed this lawsuit against Selective ("the Selective action") in three capacities: (1) as personal representative of Bennett's estate, (2) as personal representative of the estate of Mary E. Hartsel, who died after the accident for unrelated reasons, and (3) in his individual capacity. Norman filed an amended complaint in which he alleged the violation of the duty to defend, the duty to indemnify and the duty of good faith and fair dealing in causes of action for breach of contract, breach of fiduciary duty, bad faith, improper claims practices, and negligence.
The duties of an insurance company arising out of a liability policy in any particular situation are governed primarily by two factors: (1) the nature of the underlying litigation, and (2) the identity of the parties to the insurance contract. We discuss each of those as a backdrop for our conclusion as a matter of law that Selective cannot be liable to Norman in any of the capacities in which he brought this lawsuit on any of the theories of recovery asserted.
We first discuss the Jones action. Jones alleged that Bennett was the driver of the car, and that Bennett's negligence caused damages associated with the death of Jones. Because Selective insured the car, Bennett's estate is insured under the policy. See S.C. Code Ann. § 38-77-30(7) (2002) (). Selective therefore had a duty to defend Bennett's estate, and a duty to indemnify Bennett's estate for any judgment Jones' estate may obtain up to the limits of liability set forth in the policy. Sloan Const. Co. v. Central Nat. Ins. Co. of Omaha, 269 S.C. 183, 186, 236 S.E.2d 818, 820 (1977) (); Nationwide Mut. Ins. Co. v. Tate, 313 S.C. 444, 447, 438 S.E.2d 266, 268 (Ct. App. 1993) (). Norman was the personal representative of Bennett's estate. Therefore, Selective's two duties in the Jones action were owed to Norman in his capacity as personal representative of Bennett's estate.
No other person or entity connected with the Selective action stood to gain or to lose in the Jones action. From Norman's standpoint, the only way in which he could be affected by the Jones action was in his capacity defending the Jones action as personal representative of Bennett's estate. Mary was even farther removed from the Jones action. Neither Norman nor Mary could ever be called upon to pay any judgment imposed on Bennett's estate as a result of the Jones action. Therefore, the only duties owed by Selective arising out of the Jones action were the duty to defend and to indemnify Bennett's estate, acting through Norman as its personal representative.
In Bennett's action, Bennett alleged Jones was the driver, and his negligence caused damages associated with Bennett's death. Selective insured the car, and Jones was a permissive driver. Therefore, Selective owed a duty to defend Jones' estate and to indemnify it for any judgment Bennett's estate may obtain up to the policy limits. See S.C. Code Ann. § 38-77-30(7). Just as above, no other person connected with Bennett's action stood to gain or to lose in Bennett's action. While Norman and Mary are wrongful death beneficiaries[2] and beneficiaries of Bennett's estate, and in those capacities might stand to gain indirectly from a favorable outcome of Bennett's action, the actual right to recover in those actions belongs exclusively to the personal representative, not to Norman and Mary. See Hopkins v. Fidelity Ins. Co., 240 S.C. 230, 233, 125 S.E.2d 468, 469 (1962) (); S.C. Code Ann. § 15-5-90 (2005) (). Therefore, neither Norman nor Mary had any stake in Bennett's action except in their deriviative capacities as beneficiaries under the wrongful death statute and as beneficiaries of Bennett's estate.
In summary, as to both the Jones action and Bennett's action, the only person or entity involved in the Selective action who stood to gain or lose was Norman, but only in his capacity as personal representative of Bennett's estate.
The insurance policy lists four named insureds: (1) Reserve Associates Limited, (2) CB Reserve Homeowners Association, (3) Mary E. Hartsel, and (4) Norman C. Hartsel, LPA. Reserve Associates Limited and CB Reserve Homeowners Association are apparently entirely unrelated to the Jones and Bennett actions, and the record contains no information about them.
Mary is a party to the insurance contract. Selective owed her duties arising out of the contract, including the duty of good faith and fair dealing. Doe v. South Carolina Med. Mal. Liab. Joint Underwriting Assoc., 347 S.C. 642, 649, 557 S.E.2d 670, 674 (2001) (); Tadlock Painting Co. v. Maryland Cas. Co., 322 S.C. 498, 501, 473 S.E.2d 52, 54 (1996) (). As explained above, however, Mary does not stand to gain or lose in respect to either the Jones action or Bennett's action, and thus Selective had no occasion to act upon its duties to her. Because Selective had no duty to Mary in connection with either the Jones action or Bennett's action, Selective cannot be liable to Norman acting as her personal representative.
Norman C. Hartsell, LPA, ("the LPA") is also a party to the insurance contract. However, the LPA is even farther removed from the Jones action and Bennett's action than Mary. The LPA does not have any interest whatsoever, not even a derivative interest, in either of the underlying lawsuits. Because the LPA has no personal interest in the lawsuit, it has no claim for a violation of any duty Selective owed arising out of the lawsuit.
Norman in his individual capacity claims that he is party to the insurance contract. While the policy provides that members and partners of corporate named insureds such as the LPA are also insureds, that provision applies "only with respect to the conduct of your business." The Amended Complaint does not allege any connection between the accident and the conduct of the LPA's business, nor is there any allegation that Norman is conducting business in his capacity as personal representative of his son's estate. Therefore, Norman is not a party to the insurance contract in connection with the Selective action.
None of the parties to the Selective policy have any involvement in either of the underlying lawsuits, and none of the participants in the underlying lawsuits have any relationship to the Selective policy. Therefore, as explained below, there can be no liability by Selective to Norman for any of the theories of recovery asserted in this litigation.
Because Norman is not a party to the insurance contract in his capacity as personal representative of Bennett's estate or in his individual capacity in connection with the underlying lawsuits, he has no claim for breach of contract in those capacities. In his capacity as personal representative of Mary's estate, he does represent a party to the contract. However, Mary has no individual interest in the Jones action or Bennett's action. Therefore she has no claim for breach of...
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