Leggett v. Smith

• Decision Date: 10 November 2009
• Docket Number: No. 4630.,4630.
• Court: South Carolina Court of Appeals
• Parties: Brandon LEGGETT, Respondent v. Bryan J. SMITH, Respondent, Kenneth Smith, Mary Elizabeth Hall Smith and New York Central Mutual Fire Insurance Company, Defendants, and New York Mutual Fire Insurance Company, Appellant.

686 S.E.2d 699

Brandon LEGGETT, Respondent v. Bryan J. SMITH, Respondent Kenneth Smith, Mary Elizabeth Hall Smith and New York Central Mutual Fire Insurance Company, Defendants, and New York Mutual Fire Insurance Company, Appellant.

No. 4630.

Court of Appeals of South Carolina.

Heard September 1, 2009.

Decided November 10, 2009.

Charles V. Leonard, of Myrtle Beach, Jeffrey D. Wait, of Saratoga Springs, Steven P. Curvin, of Buffalo, for Appellant.

Douglas Charles Baxter, of Myrtle Beach, Gene McCain Connell, Jr., of Surfside Beach, for Respondent.

HUFF, J.

In this appeal from a declaratory judgment action, New York Central Mutual Fire Insurance Company (New York Central) appeals the trial court's ruling that South Carolina had personal jurisdiction over New York Central and New York Central provided coverage for the accident at issue. We affirm.

FACTS/PROCEDURAL HISTORY

On April 23, 2004, Bryan Smith was involved in an accident in which he failed to yield the right-of-way to a motorcycle driven by Brandon Leggett.¹ Smith was driving a 1996 Ford Escort, which he had recently titled in his name. Until that time, the Escort had been owned by his father, Kenneth P. Smith (Father). The car had been insured under a policy with New York Central in which Father and Smith's mother, Mary Elizabeth Hall Smith, (Mother) were the named insureds. Smith was listed as a "covered driver" under this policy.

New York Central is a New York corporation licensed to engage in the insurance business in New York. It is not licensed to do business or to sell insurance in South Carolina. Smith's parents are New York residents. Smith moved from New York to Myrtle Beach, South Carolina in 1999. At that time he drove an Audi owned and insured by his parents. In 2001, Father purchased the Ford Escort and provided it for Smith to use while he attended college at Coastal Carolina University. Before starting college, Smith established legal residency in South Carolina. He turned in his New York driver's license and acquired a South Carolina license in March of 2001. Mother testified that she informed her New York Central agent, the Mang Agency, Smith was using the car while he attended college in South Carolina.

Father signed over title to Smith in January of 2004 with the intent Smith would have ownership of the vehicle once it was titled and insured in South Carolina. On April 5, 2004, Smith went to the South Carolina Department of Motor Vehicles (DMV) to transfer the title and register the vehicle in his name. At the request of the DMV employee, he presented the New York Central insurance card and told her both of his parents' names were on the card. He listed the Mang Insurance Company on the DMV application as the insurance agency. According to Smith, the DMV employee told him he had thirty days to change the insurance to South Carolina. Smith called several insurance agents before choosing State Farm. He called a State Farm agent on April 12 and was told he needed a copy of the declaration page from the New York Central policy. That same day Smith called the Mang Agency and requested a faxed copy of the policy. Smith testified he told the agent he had transferred the title to his name and that he needed the document in order to acquire insurance within the thirty-day time frame. Although Smith received the fax from the Mang Agency, he failed to acquire insurance from State Farm or any other agency before the accident. New York Central sent Smith's parents notice that effective May 4, 2004, eleven days after the accident, the Ford Escort was deleted from the policy and amended the covered drivers on the policy to remove Smith due to his being "out of household." In addition, New York Central sent notice it was cancelling the policy effective May 21, 2004. New York Central refunded some of the premiums paid by Smith's parents for coverage for Smith, but it refused to refund any premiums paid through May 4, 2004. It subsequently reinstated the policy as to Smith's parents' remaining vehicle.

After the accident, New York Central informed Leggett's counsel of the limits of the policy. It hired South Carolina insurance adjusters to appraise the damage to Leggett's motorcycle and paid Leggett $5,636.65 for the motorcycle on June 7, 2004. On June 9, 2004, New York Central sent Leggett's counsel a letter denying liability coverage for the claim.

Leggett filed this action asserting a negligence claim against Smith and his parents and requesting a declaratory judgment that New York Central provided coverage for the accident. Smith filed a cross-claim requesting the court determine he was in fact an insured under the New York Central policy. New York Central answered denying coverage and asserting the state of South Carolina lacked jurisdiction over it. The trial court stayed the negligence claims against the Smiths until the declaratory judgment action was heard. After a hearing on the declaratory judgment action, the trial court determined South Carolina had personal jurisdiction over New York Central. Applying New York law,² the court held New York Central was obligated to provide coverage for the accident. The court subsequently denied New York Central's Rule 59, SCRCP, motion. This appeal followed.

STANDARD OF REVIEW

"A suit for declaratory judgment is neither legal nor equitable, but is determined by the nature of the underlying issue." Felts v. Richland County, 303 S.C. 354, 356, 400 S.E.2d 781, 782 (1991). An action to determine coverage under an insurance policy is an action at law. City of Hartsville v. S.C. Mun. Ins. & Risk Fin. Fund, 382 S.C. 535, 543, 677 S.E.2d 574, 578 (2009). On appeal of an action at law tried without a jury, the findings of fact of the trial court will not be disturbed unless found to be without evidence which reasonably supports the trial court's findings. Townes Assocs., Ltd. v. City of Greenville, 266 S.C. 81, 86, 221 S.E.2d 773, 775 (1976).

LAW/ANALYSIS

A. Personal jurisdiction

New York Central argues the trial court erred in determining South Carolina had personal jurisdiction over it. We disagree.

"The question of personal jurisdiction over a nonresident defendant is one which must be resolved upon the facts of each particular case." State v. NV Sumatra Tobacco Trading, Co., 379 S.C. 81, 88, 666 S.E.2d 218, 221 (2008). The circuit court's decision should be affirmed unless unsupported by the evidence or influenced by an error of law. Cockrell v. Hillerich & Bradsby Co., 363 S.C. 485, 491, 611 S.E.2d 505, 508 (2005).

"Personal jurisdiction is exercised as `general jurisdiction' or `specific jurisdiction.'" Coggeshall v. Reprod. Endocrine Assocs. of Charlotte, 376 S.C. 12, 16, 655 S.E.2d 476, 478 (2007). The court acquires specific jurisdiction over a cause of action arising from a defendant's contacts with the state through the long arm statute. S.C.Code Ann. § 36-2-803 (Supp.2008); Cockrell, 363 S.C. at 491, 611 S.E.2d at 508. "Because South Carolina treats its long-arm statute as coextensive with the due process clause, the sole question becomes whether the exercise of personal jurisdiction would violate due process." Cockrell, 363 S.C. at 491, 611 S.E.2d at 508.

"General jurisdiction attaches even when the nonresident defendant's contacts with the forum state are not directly related to the cause of action, if the defendant's contacts are both `continuous and systematic.'" Id. at 495, 611 S.E.2d at 510 (citing Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 413-14 nn. 8-9, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984)).

These contacts must be "so substantial and of such a nature as to justify suit against [the respondents] on causes of action arising from dealings entirely different from those activities." International Shoe Co. v. Washington, 326 U.S. 310, 318, 66 S.Ct. 154, 90 L.Ed. 95 (1945). Furthermore, the defendant's contacts with the forum must satisfy the due process clause. Federal Ins. Co. v. Lake Shore Inc., 886 F.2d 654, 660 (4th Cir.1989).

Cockrell, 363 S.C. at 495, 611 S.E.2d at 510.

Due process requires minimum contacts exist between the defendant and the forum state such that maintenance of the suit does not offend traditional notions of fair play and substantial justice. Id. at 491, 611 S.E.2d at 508. "Further, the due process requirement mandates the defendant possess sufficient minimum contacts with the forum state such that he could reasonably anticipate being haled into court there." Power Prods. & Servs. Co. v. Kozma, 379 S.C. 423, 431-32, 665 S.E.2d 660, 665 (Ct.App.2008). In determining whether such minimum contacts exist, courts apply a two-pronged analysis. S. Plastics Co. v. S. Commerce Bank, 310 S.C. 256, 260, 423 S.E.2d 128, 130-131 (1992). The court must (1) find that the defendant has the requisite minimum contacts with the forum, without which, the court does not have the "power" to adjudicate the action and (2) find the exercise of jurisdiction is reasonable or fair. Id. at 260, 423 S.E.2d at 131. "If either prong fails, the exercise of personal jurisdiction over the defendant fails to comport with the requirements of due process." Id.

Under the power prong, a minimum contacts analysis requires a court to find the defendant directed its activities to residents of South Carolina and the cause of action arises out of or relates to those activities. Moosally v. W.W. Norton & Co., 358 S.C. 320, 331-32, 594 S.E.2d 878, 884 (Ct. App.2004).

It is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws. The "purposeful availment" requirement ensures that a defendant will not be haled into a jurisdiction solely as a result of random, fortuitous, or attenuated contacts.

Moosally, 358 S.C. at 332, 594 S.E.2d at 884 (citations omitted). Neither should a defendant be haled into a forum...