Liberty Mut. Fire Ins. Co. v. McKnight, C.A. No. 2:14–cv–02145–PMD.

CourtUnited States District Courts. 4th Circuit. United States District Court of South Carolina
Citation125 F.Supp.3d 602
Decision Date14 August 2015
Docket NumberC.A. No. 2:14–cv–02145–PMD.
Parties LIBERTY MUTUAL FIRE INSURANCE COMPANY, Plaintiff, v. Rickie Joe McKNIGHT and Clarice McKnight, Defendants.

Morgan S. Templeton, Charleston, SC, for Plaintiff.

Katherine C. Lohr, The Mangus Law Firm LLC, North Charleston, SC, for Defendants.



This matter is before the Court on Plaintiff Liberty Mutual Fire Insurance Company's ("LMFIC") Motion for Summary Judgment (ECF No. 17) ("Motion") and Defendants Rickie Joe McKnight ("Mr. McKnight") and Clarice McKnight's ("Mrs. McKnight") (collectively "the McKnights") Cross Motion for Summary Judgment (ECF No. 18) ("Cross Motion"). For the reasons set forth herein, the Court denies LMFIC's Motion and grants the McKnights' Cross Motion.


This declaratory judgment action arises out of an automobile accident and a resulting dispute between the McKnights and LMFIC over whether an automobile insurance policy provides underinsured motorist ("UIM") coverage in connection with the accident. LMFIC issued an automobile insurance policy to the McKnights bearing policy number A02–258413081–70 0 4 ("Policy"), which afforded coverage to the McKnights, as named insureds, effective June 13, 2009. The Policy was subsequently renewed, with an effective period of June 13, 2010, through June 13, 2011, and the Parties do not dispute that the Policy was in effect at all times relevant to this action. As issued, the Policy provided liability coverage with limits of $100,000/$300,000/$50,000 and uninsured motorist ("UM") coverage with limits of $25,000/$50,000/$25,000. According to the terms of the Policy, it did not include UIM coverage.

On February 27, 2011, Mr. McKnight was involved in a collision with Jorge Gonzales Islas ("Islas"). At the time of the accident, Islas was insured under an insurance policy issued by South Carolina Farm Bureau Insurance Company ("Farm Bureau"). On or about March 30, 2011, Farm Bureau tendered $25,000—apparently the minimum limits of Islas's policy with Farm Bureau—to the McKnights in exchange for a covenant not to execute against Islas and Farm Bureau. The McKnights subsequently notified LMFIC of their intent to seek UIM coverage under their Policy; however, LMFIC asserted that the McKnights did not elect to purchase such coverage.

On February 11, 2014, the McKnights filed a negligence action—and an accompanying loss of consortium claim—against Islas in state court, 2014–CP–22–00107 ("Underlying Action"). The McKnights thereafter served LMFIC with a copy of the complaint as required by section 38–77–160 of the South Carolina Code of Laws. LMFIC filed a conditional answer to the McKnights' complaint in the Underlying Action but did not elect to assume Islas's defense.

On June 3, 2014, LMFIC commenced this declaratory judgment action, pursuant to 28 U.S.C. § 2201, requesting a declaration from this Court that "it has no obligation to indemnify the McKnights for any judgment entered in the [Underlying Action] as no UIM coverage was purchased by the McKnights" and that "reformation ... is not warranted in this matter." (Pl.'s Compl. ¶ 16, ECF No. 1.) Following discovery, LMFIC filed the instant Motion on February 6, 2015, contending that summary judgment is both warranted and appropriate because the McKnights rejected LMFIC's meaningful offer of UIM coverage. On February 23, 2015, the McKnights filed their Cross Motion, asserting that LMFIC did not make a meaningful offer of UIM coverage and, consequently, that the Policy should be reformed by operation of law to include UIM coverage. Pursuant to the Consent Briefing Order, LMFIC filed its Reply and Memorandum in Opposition to the McKnights' Cross Motion on March 12, 2015, and the McKnights filed their Reply on March 19, 2015. Accordingly, the pending motions have been fully briefed and are now ripe for consideration.


This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. § 1332, as there is complete diversity of the Parties and the amount in controversy exceeds $75,000. LMFIC is a corporation organized under the laws of Wisconsin with its principal place of business in Massachusetts. The McKnights are citizens and residents of South Carolina. Finally, the amount in controversy is in excess of $75,000, exclusive of interest and costs. Therefore, this Court has diversity jurisdiction over this case.


To grant a motion for summary judgment, a court must find that "there is no genuine dispute as to any material fact." Fed.R.Civ.P. 56(a). The judge is not to weigh the evidence but rather must determine if there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). All evidence should be viewed in the light most favorable to the nonmoving party. Perini Corp. v. Perini Constr., Inc., 915 F.2d 121, 124 (4th Cir.1990). "[I]t is ultimately the nonmovant's burden to persuade [the court] that there is indeed a dispute of material fact. It must provide more than a scintilla of evidence—and not merely conclusory allegations or speculation—upon which a jury could properly find in its favor." CoreTel Va., LLC v. Verizon Va., LLC, 752 F.3d 364, 370 (4th Cir.2014) (citations omitted) (citing Thompson v. Potomac Elec. Power Co., 312 F.3d 645, 649 (4th Cir.2002) ). "[W]here the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, disposition by summary judgment is appropriate." Teamsters Joint Council No. 83 v. Centra, Inc., 947 F.2d 115, 119 (4th Cir.1991). Summary judgment is not "a disfavored procedural shortcut," but an important mechanism for weeding out "claims and defenses [that] have no factual basis." Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

When opposing parties file motions for summary judgment, the trial court applies the same standard of review to both motions. See Northfield Ins. Co. v. Boxley, 215 F.Supp.2d 656, 657 (D.Md.2002). "The role of the court is to ‘rule on each party's motion on an individual and separate basis, determining, in each case, whether a judgment may be entered in accordance with the Rule 56 standard.’ " Id. at 658 (quoting Towne Mgmt. Corp. v. Hartford Acc. & Indem. Co., 627 F.Supp. 170, 172 (D.Md.1985) ); see also Mingus Constructors, Inc. v. United States, 812 F.2d 1387, 1391 (Fed.Cir.1987) ("[T]he court must evaluate each party's motion on its own merits, taking care in each instance to draw all reasonable inferences against the party whose motion is under consideration."). The mere fact that both parties seek summary judgment "does not ‘establish that there is no issue of fact and require that summary judgment be granted to one side or another.’ " World–Wide Rights Ltd. P'ship v. Combe Inc., 955 F.2d 242, 244 (4th Cir.1992) (quoting Am. Fid. & Cas. Co. v. London & Edinburgh Ins. Co., 354 F.2d 214 (4th Cir.1965) ); see also ITCO Corp. v. Michelin Tire Corp., 722 F.2d 42, 45 n. 3 (4th Cir.1983) ("The court is not permitted to resolve genuine issues of material facts on a motion for summary judgment—even where ... both parties have filed cross motions for summary judgment."); Lac Courte Oreilles Band of Lake Superior Chippewa Indians v. Voigt, 700 F.2d 341, 349 (7th Cir.1983) ("[C]ross-motions for summary judgment do not automatically empower the court to dispense with the determination whether questions of material fact exist."). Nevertheless, dueling motions for summary judgment "may be probative of the nonexistence of a factual dispute," because "when both parties proceed on the same legal theory and rely on the same material facts the court is signaled that the case is ripe for summary judgment." Shook v. United States, 713 F.2d 662, 665 (11th Cir.1983) (citing Bricklayers, Masons & Plasterers Int'l Union v. Stuart Plastering Co., 512 F.2d 1017, 1023 (5th Cir.1975) ); see also Nafco Oil & Gas, Inc. v. Appleman, 380 F.2d 323, 325 (10th Cir.1967) ("[B]y the filing of a [summary judgment] motion a party concedes that no issue of fact exists under the theory he is advancing, but he does not thereby so concede that no issues remain in the event his adversary's theory is adopted.").


In its Motion, LMFIC contends that it is entitled to summary judgment because it made a meaningful offer of UIM coverage to the McKnights, which they rejected, in turn relieving LMFIC of the obligation to indemnify the McKnights in the Underlying Action. The McKnights, however, assert that summary judgment should be entered in their favor and the Policy reformed because LMFIC did not make the requisite meaningful offer of optional UIM coverage.1 Thus, the critical question before the Court is whether LMFIC made a meaningful offer of UIM coverage to the McKnights. The relevant undisputed facts are set forth below as they correspond to the Court's analysis. For the reasons detailed extensively herein, the Court concludes that LMFIC did not make a meaningful offer of UIM coverage to the McKnights.

I. Governing Law

This Court has jurisdiction over the present action pursuant to 28 U.S.C. § 1332 ; therefore, the Court must apply South Carolina law and, where necessary, predict how the Supreme Court of South Carolina would decide a particular issue. See Nationwide Mut. Ins. Co. v. Powell, 292 F.3d 201, 203 (4th Cir.2002) ; Hartsock v. Am. Auto. Ins. Co., 788 F.Supp.2d 447, 450–51 (D.S.C.2011). The Parties agree that South Carolina law governs this dispute. South Carolina law requires automobile insurers to offer optional UIM coverage and optional additional UM coverage up to the limits of the insured's liability coverage.2 S.C.Code Ann. § 38–77–160 (2015) ; see also Carter v. Standard Fire Ins. Co., 406 S.C. 609, 753 S.E.2d 515, 519 (2013) ( "[A]n insurer must offer UIM coverage pursuant to [section] 38–77–160 when the insurer...

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