Holroyd v. Requa, 3852.

• Decision Date: 09 August 2004
• Docket Number: No. 3852.,3852.
• Citation: 603 S.E.2d 417,361 S.C. 43
• Parties: Christopher HOLROYD, Gillian Holroyd and American AVK Co., Respondents, v. Michael R. REQUA, Appellant.
• Court: South Carolina Court of Appeals

361 S.C. 43

603 S.E.2d 417

Christopher HOLROYD, Gillian Holroyd and American AVK Co., Respondents, v. Michael R. REQUA, Appellant.

No. 3852.

Court of Appeals of South Carolina.

Heard March 10, 2004.

Decided August 9, 2004.

Withdrawn, Substituted and Refiled September 24, 2004.

Eugene N. Zeigler, Hamilton Osborne, Jr. and James Y. Becker, all of Columbia, for Appellant.

Justin O'Toole Lucey and Mary L. Arnold, both of Mt. Pleasant, for Respondents.

CURETON, A.J.:

Christopher Holroyd, Gillian Holroyd, and American AVK Company (collectively "Respondents") brought this action against their insurance agent, Michael Requa, alleging various causes of action for misrepresentation, fraud, and negligence stemming from Requa's solicitation and sale of a health insurance policy to Respondents. Requa denied these allegations and claimed Respondents' state law causes of action were preempted and barred by the federal Employee Retirement Income Security Act, 29 U.S.C. §§ 1001 to -1461 (Supp.2003) ("ERISA"). The jury rendered a verdict in favor of Respondents. The trial court subsequently denied Requa's post-trial motions for judgment notwithstanding the verdict and new trial. Requa now appeals. We affirm.

BACKGROUND

Requa was an insurance agent doing business in Moncks Corner, South Carolina. At the center of this case is a health insurance plan administered by Fidelity Group, Inc., that Requa marketed to American AVK Company for its employees. At issue was whether Requa was liable for Fidelity's failure to pay legitimate medical expense claims filed by Holroyd, one of American AVK's employees.

Fidelity's Health Insurance Plan

The program administered by Fidelity was not a typical insurance plan. Rather than being developed and sold by a traditional insurance company, the Fidelity plan was the product of an association of several distinct entities.

Around 1995, a purported employee union called the International Workers Guild (IWG) (also known as the International Workers Association) entered into a collective bargaining agreement with a purported employer's association, the National Association of Business Owners and Professionals (NABOP).¹ Under this agreement, employees joining IWG would be provided healthcare benefits through a third-party-trust called the International Guild Health and Welfare Trust Fund (IWG Fund). The arrangement provided in part that employers would join the collectively bargained agreement prepared by the organizers of the arrangement with IWG and NABOP. Employees paid membership dues to IWG, and the employers made monthly contributions on behalf of their enrolled employees. The IWG Fund managed the plan, and Fidelity marketed it and administered claims.

Requa was recruited to market the Fidelity plan to his customers by John Branham and Marty Geitler, the exclusive general agents for the Plan. Over the course of two meetings, Branham and Geitler explained the structure and benefits of the Plan and provided Requa with marketing materials prepared by Fidelity. Several months later, Requa executed a marketing agreement to act as agent for the Fidelity Plan.

Requa's Solicitation of American AVK

In late 1996, Requa sent a letter to American AVK Company, a subsidiary of an international company with offices in California and South Carolina, soliciting interest in a group health insurance program from Fidelity Group, Inc.

The letter described the pricing, benefits, and network of care providers that were included in the Fidelity plan. Requa made various claims in the letter about the quality of the Fidelity plan. He wrote that it offered "great benefits with reasonable prices," had "[a] history of low rate increases and an A+ rate," was "# 1 in benefits compared to other carriers," and was "[l]ocally strong with reciprocal access nationwide." In addition to these more subjective claims, Requa specifically noted that "[t]he Fidelity Group has an average annual rate increase of only 3.4% over the last 8 years." The letter further claimed Fidelity was reinsured through "Reliance [Reinsurance Company], rated A + by A.M. Best."² The Fidelity plan was the only product promoted in the letter.

Shortly after receiving Requa's letter, American AVK decided to enroll in the Fidelity Plan. American AVK paid monthly premiums for the coverage and the participating employees made monthly contributions.

Failure of the Fidelity Plan

Within months of American AVK's enrollment in the Plan, Fidelity began having problems paying claims in a timely manner. No later than July 1997, Requa was aware Fidelity was experiencing problems — specifically advising one of his clients that "[t]he Fidelity Group has apparently experienced rapid growth — too soon — without the capacity to handle it."

Also in July 1997, Requa received a letter from the South Carolina Department of Insurance notifying him that the Fidelity Group's insurance plan and Requa's involvement in marketing that plan were the subject of an investigation as to whether Fidelity had complied with state law regulating the sale of insurance. The letter instructed Requa to immediately cease the marketing and sale of the Plan until the Department of Insurance was able to make a final determination.

It is undisputed that Requa did not advise American AVK or its employees of the difficulties experienced by the Fidelity Plan or the ongoing investigation when he learned of the problems. In May 1998, Requa claimed he sent a letter to all of his clients enrolled in the Fidelity Plan, including American AVK, advising them that "your health insurer, The Fidelity Group, has some serious problems and that it may be time to move to another, more competent carrier." Respondents, however, deny ever having received this letter.

Holroyd's Unpaid Claims

This action arises from unpaid medical claims submitted to Fidelity by one of American AVK's enrolled employees, Christopher Holroyd. Holroyd suffered severe heart attacks in July and October 1998. He incurred approximately $65,000 in medical costs, which Fidelity did not pay. Because Requa failed to inform them of Fidelity's problems, Holroyd, his wife, Gillian, and American AVK filed the underlying action against Requa. The jury returned a verdict in favor of Respondents on the charges of negligence, negligent misrepresentation, and breach of fiduciary duty. Respondents were awarded $365,000 in actual damages and $180,000 in punitive damages.

Requa moved for judgment notwithstanding the verdict (JNOV), a new trial absolute, and a new trial nisi remittitur, which were denied. Requa appeals.

STANDARD OF REVIEW

"In ruling on directed verdict or JNOV motions, the trial court is required to view the evidence and the inferences that reasonably can be drawn therefrom in the light most favorable to the party opposing the motions." Sabb v. South Carolina State Univ., 350 S.C. 416, 427, 567 S.E.2d 231, 236 (2002). The motions must be denied by the trial court when the evidence yields more than one inference or its inference is in doubt. Steinke v. South Carolina Dep't of Labor, Licensing & Regulation, 336 S.C. 373, 386, 520 S.E.2d 142, 149 (1999). On appeal from the denial of a motion for a directed verdict or JNOV, this Court will reverse the trial court only where there is no evidence to support the ruling below. Id.; Creech v. South Carolina Wildlife & Marine Res. Dep't, 328 S.C. 24, 29, 491 S.E.2d 571, 573 (1997).

"Further, a trial court's decision granting or denying a new trial will not be disturbed unless the decision is wholly unsupported by the evidence or the court's conclusions of law have been controlled by an error of law." Sabb, 350 S.C. at 427, 567 S.E.2d at 236; Vinson v. Hartley, 324 S.C. 389, 405, 477 S.E.2d 715, 722 (Ct.App.1996). In determining whether the judge erred in denying a motion for a new trial, we must look at the testimony and inferences raised therefrom in favor of the nonmoving party. Welch v. Epstein, 342 S.C. 279, 302-03, 536 S.E.2d 408, 420 (Ct.App.2000).

LAW/ANALYSIS

I. Timeliness of Appeal

As a threshold matter, Respondents argue this Court lacks subject matter jurisdiction to consider this appeal because Requa's post-trial motions were not timely filed. We disagree.

Rule 59(b), SCRCP, provides that "[t]he motion for new trial shall be made promptly after the jury is discharged, or in the discretion of the court not later than 10 days thereafter." In the present case, the jury rendered its verdict on December 20, 2001. Requa filed his post-trial motions twenty-six days later on January 15, 2002. Respondents assert that Requa's failure to make his post-trial motion within the ten days prescribed by Rule 59(b) divests this Court of jurisdiction to review the case.

The jury's verdict in this case did not constitute an adjudication of all the claims in the case. The parties agreed that Respondents' claim brought under the Unfair Trade Practices Act (UTPA) would be submitted to the trial court. The trial court stated at the conclusion of trial that a written order on the UTPA claim would be issued at a later date. Respondents sent Requa a notice on January 8, 2002, that they intended to withdraw their UTPA claim. The UTPA claim, however, was formally withdrawn by Respondents on January 23, 2002.

Rule 54(b), SCRCP, provides:

When more than one claim for relief is presented in an action, whether as a claim, counterclaim, cross-claim, or third-party claim, or when multiple parties are involved, the court may direct the entry of a final judgment as to one or more but fewer than all of the claims or parties only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment. In the absence of such determination and direction, any order or other form of decision, however designated, which adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties shall not terminate the action as to

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