Morgan v. Liberty Mutual Insurance Company

• Decision Date: 22 December 1966
• Docket Number: Civ. A. No. 66-214.
• Citation: 261 F. Supp. 709
• Court: U.S. District Court — District of South Carolina
• Parties: Sarah MORGAN and American Mutual Fire Insurance Company, Plaintiffs, v. LIBERTY MUTUAL INSURANCE COMPANY, Defendant.

261 F. Supp. 709

Sarah MORGAN and American Mutual Fire Insurance Company, Plaintiffs, v. LIBERTY MUTUAL INSURANCE COMPANY, Defendant.

Civ. A. No. 66-214.

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

December 22, 1966.

J. Reese Daniel, Columbia, S. C., for plaintiffs.

F. B. Grier, Jr., of Nelson, Mullins, Grier & Scarborough, Columbia, S. C., for defendant.

HEMPHILL, District Judge.

Defendant, by motion, challenges the jurisdiction of this court alleging failure of jurisdictional minimum.¹ Of necessity the pleadings must be explored. Again we find the usual where an insurer seeks to have the federal trial court determine the law of responsibility or coverage under its policy, hoping to avoid the effects of possible adverse judgment in the state court.² The issue of coverage is not before this court at this sitting, and there is the pending state court action as admitted by all parties.

Plaintiffs allege that Sarah Morgan, in July 1965, bought a Buick automobile from Liberty Motors of Columbia, South Carolina, a registered dealer; that Sarah Morgan was delivered possession. The seller did not comply with Section 46-150.16,³ S.C.Code Annotated (1962). On October 3, 1965 the car rolled from in front of the Morgan home down a street and into the home of Will Blue. Will Blue owned an automobile liability policy with plaintiff American. He instituted suit for personal injuries against plaintiff Morgan for $25,000.00. Defendant, as insurer of Liberty Motors, and recipient of a copy of Blue's pleadings, is alleged by plaintiffs to be the responsible insurer because of failure to file the requisite papers under the South Carolina Statute, supra.

This court recognizes the reason for the claim of plaintiff that the automobile title laws of South Carolina require certain procedures to transfer title. Clouse v. American Mut. Liab. Ins. Co., 334 F.2d 18 (4th Cir. 1965). The court will not attempt to discuss the difference, if any exists, between Clouse and Grain Dealers Mut. Ins. Co. v. Julian, 247 S.C. 89, 145 S.E.2d 685. Fortunately, for this decision, it is unnecessary to pass on the merits of the controversy.

Admittedly the defendant's policy contained the statutory requisites of $10,000 coverage for personal injury and $5,000 for property damage. The plaintiff alleges in Paragraph 9 of the Complaint:

That on December 6, 1965, Will Blue instituted an action against the plaintiff, Sarah Morgan, seeking damages in the sum of Twenty-five Thousand and No/100 ($25,000.00) Dollars, and the plaintiff Sarah Morgan is still subject to a claim for property damages.

Defendant "admits on information and belief the allegations of Paragraph 9 of the Complaint."

Defendant contends that since Blue only sued for personal injury in the Court of Common Pleas for Richland County that the absolute liability of defendant, if at all to Sarah Morgan, or for her, is $10,000.00. It goes further and points out that the South Carolina Supreme Court has decided that where a motorist suffers personal injury and property damage he is required to sue upon all claims in one action and any claim omitted is lost.⁴ This court agrees that such is the law, and accepts defendant's quotation from the Powers case:

The action was brought and tried without objection upon the theory that it was not for enforcement of the contract of insurance but for damages for its breach. We hold with the lower court that appellant was bound to discharge with reasonable promptness its undoubted liability under the policy. The evidence was susceptible of the conclusion, implicit in the verdict, that appellant sought to take advantage of respondent's position which was occasioned by the law requiring that his claims for personal injuries and property damage be sued upon in one action or the omitted claim lost. Holcombe v. Garland & Denwiddie, Inc., 162 S.C. 379, 160 S.E. 881. Omission of the claim for property damage would have as effectually barred it as the subsequent release, and without consideration.

This court cannot, however, agree with defendant's position that jurisdiction does not lie. It is not clear whether Blue owned the property which admittedly was damaged at the same time Blue claims personal injury. This court has no right to preempt Blue's right to amend his state court action under the provisions of Section 10-692,⁵ South Carolina Code Annotated (1962). In South Carolina, there is much discretion in allowing amendments before a trial, and includes such changes as inserting a new cause of action or a new defense. Knight, Yancey & Co. v. Aetna Cotton Mills, 80 S.C. 213, 61 S.E. 396; Elliott v. Carroll, 179 S.C. 329, 184 S.E. 92. Later decisions give wide latitude in permitting party to shape his pleadings to suit his purpose, usually before trial, and there is very little restriction where there is no surprise. Vernon v. Atlantic Coast Line R. Co., 218 S.C. 402, 63 S.E.2d 53.

This court reasons that if Blue owns the property, he may amend. Certainly he has now been alerted to that necessity if he owns. If he does not own, this court cannot, will not surmise whether the owner will bring suit within the six⁶ years allowed. Sarah Morgan may have another day in court. If so, dependent upon the determination of coverage responsibility, defendant may be called on, up to the limit of the $5,000 provided under the terms of the policy. It follows that, as the matter now stands, there is no definite limitation of the potential liability of defendant to the $10,000. Sarah Morgan has been sued for $25,000. It may be that defendant is obligated to defend; the immediate issue is not before this forum at this time.

Generally, where an automobile liability policy is involved in proceedings for...