Nationwide Mut. Ins. Co. v. Smith, 4295.

• Decision Date: 26 September 2007
• Docket Number: No. 4295.,4295.
• Citation: 654 S.E.2d 837
• Court: South Carolina Court of Appeals
• Parties: NATIONWIDE MUTUAL INSURANCE COMPANY, Appellant, v. James W. SMITH, Jr. and Elizabeth Smith, Respondents.

654 S.E.2d 837

NATIONWIDE MUTUAL INSURANCE COMPANY, Appellant, v. James W. SMITH, Jr. and Elizabeth Smith, Respondents.

No. 4295.

Court of Appeals of South Carolina.

Submitted May 1, 2007.

Filed September 26, 2007.

Rehearing Denied January 16, 2008.

John Robert Murphy, of Columbia, for Appellant.

Bradley Baker, of Lexington, for Respondents.

HUFF, J.

James W. Smith, Jr. and Elizabeth Smith (the Smiths) were involved in an automobile accident with an uninsured motorist. Nationwide Mutual Insurance Company (Nationwide) brought a declaratory judgment action to determine whether the insurance policy covering the vehicle in which the Smiths were riding was void for lack of an insurable interest. The trial court granted summary judgment in favor of the Smiths. Nationwide appeals.¹

FACTS

On October 29, 2003, the Smiths were involved in a motor vehicle accident in Lexington County, South Carolina. At the time of the accident, James W. Smith, Jr. was driving and Elizabeth Smith was a passenger in a 1999 Montero Sport (Montero) owned by James W. Smith, Jr. The accident was caused when Martha Lawrence (Lawrence) collided with the vehicle in front of the Smiths and then hit the Smiths causing the Montero to overturn. Lawrence was driving an uninsured vehicle. As a result of the accident the Smiths pursued uninsured motorist claims on the Nationwide Policy Number: 61 39 K 931345.

At the time of the accident, the Montero was a listed vehicle on the Nationwide Policy Number: 61 39 K 931345. While the Montero was owned by and registered to James W. Smith, Jr., the Nationwide policy covering the Montero was taken out and owned by his father, James W. Smith, Sr. (Father).² Father was the named insured under the policy, which provided uninsured motorist (UM) coverage in the amounts of $50,000 per person and $100,000 per occurrence. The policy also covered a 1992 Ford Ranger (Ranger), owned by Father and his grandson, Christopher Smith. The UM policy covering the Ranger also provided UM coverage in the amounts of $50,000 per person and $100,000 per occurrence. In addition to Father, the policy listed drivers Elizabeth Smith and Christopher Smith.³

Nationwide denied coverage and filed a declaratory judgment action for a determination that the policy covering the Montero was void for lack of an insurable interest. The Smiths answered and counterclaimed. Both Nationwide and the Smiths filed motions for summary judgment.

At the hearing, Nationwide sought a declaration that the policy was void as to the Montero and the Smiths were precluded from collecting UM coverage from that policy. Nationwide argued Father lacked an insurable interest in the vehicle because he did not own the Montero, did not control the Montero, or was not responsible for or could be held liable for its operation or use. Nationwide also raised the issue as to whether the Smiths would be entitled to UM coverage under the Ranger's policy. Nationwide noted four cases addressing the issue were pending before the supreme court. Depending on the outcome of the pending cases, Nationwide argued the Smiths would either be entitled to nothing or the basic statutory limit of $15,000 per person, $30,000 per occurrence.

The Smiths argued because they used the Montero to transport Father, Father benefited from its use and therefore had an insurable interest in the Montero. Regardless, they averred the insurable interest requirement for liability coverage was irrelevant when dealing with UM coverage. Because the uninsured motorist statute mandates insurers to provide UM coverage to the named insured and resident relatives of the named insured's household at all times, the Smiths claimed the insurable interest argument had no bearing on UM coverage.

The trial court found the insurable interest requirement for liability insurance was irrelevant to the case as the issue before the court dealt with UM coverage and not liability coverage. The trial court characterized Nationwide's position as an attempt to circumvent the statutory mandate that automobile insurance carriers must provide UM coverage on all policies issued. The trial court concluded the Smiths were entitled to $50,000 per person, $100,000 per occurrence in UM coverage on the Montero and that James W. Smith, Jr. and Elizabeth Smith each could stack the $50,000 UM coverage provided on the Montero policy and the $50,000 UM coverage provided on the Ranger. The total coverage available to each was held to be $100,000 for a total of $200,000 in UM coverage for the occurrence.

STANDARD OF REVIEW

When reviewing the grant of a summary judgment motion, this court applies the same standard of review as the trial court under Rule 56, SCRCP. Cowburn v. Leventis, 366 S.C. 20, 30, 619 S.E.2d 437, 443 (Ct.App.2005). Summary judgment is proper when there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. Rule 56(c), SCRCP. To determine whether any triable issues of fact exist, the reviewing court must consider the evidence and all reasonable inferences in the light most favorable to the non-moving party. Law v. S.C. Dep't of Corrections, 368 S.C. 424, 434, 629 S.E.2d 642, 648 (2006).

When plain, palpable, and indisputable facts exist on which reasonable minds cannot differ, summary judgment should be granted. Ellis v. Davidson, 358 S.C. 509, 518, 595 S.E.2d 817, 822 (Ct.App.2004). However, summary judgment is not appropriate where further inquiry into the facts of the case is desirable to clarify the application of the law. Bennett v. Investors Title Ins. Co., 370 S.C. 578, 588, 635 S.E.2d 649, 654 (Ct.App.2006). Even when there is no dispute as to evidentiary facts, but only as to the conclusions or inferences to be drawn from them, summary judgment should be denied. Nelson v. Charleston County Parks & Recreation Comm'n, 362 S.C. 1, 5, 605 S.E.2d 744, 746 (Ct.App.2004).

LAW/ANALYSIS

Nationwide claims the trial court erred in holding the insurable interest requirement for liability insurance was irrelevant when dealing with UM coverage. We agree.

Initially, we note that in South Carolina all automobile insurance policies are statutorily required to contain UM coverage. S.C.Code Ann. § 38-77-150 (2002) (requiring all automobile insurance policies contain a provision to protect against damages an insured is legally entitled to recover which "arise out of the ownership, maintenance or use" of an uninsured vehicle). South Carolina mandates that UM coverage must be provided in an amount equal to the minimum liability limits, id., and requires insurance carriers to offer, at the option of the insured, UM coverage up to the limits of the insured's liability coverage. S.C.Code Ann. § 38-77-160 (2002). Thus, UM coverage does not exist in and of itself, but rather is a requirement of and dependent on a valid automobile insurance policy.

An automobile insurance policy, like other forms of insurance, must be supported by an insurable interest in the named insured. American Mut. Fire Ins. Co. v. Passmore, 275 S.C. 618, 620, 274 S.E.2d 416, 417 (1981) (citations omitted); Couch on Insurance 3d § 41:1 (2005) (stating, "[t]oday, it is universally held, either by force of statute or upon public policy grounds, that insurable interest is necessary to the validity of a policy, no matter what the subject matter."). "The insurable interest required does not depend upon the named insured having either a legal or equitable interest in the property, `but it is enough that the insured may be held liable for damages to its operation and use.'" Passmore, 275 S.C. at 620-21, 274 S.E.2d at 417-18 quoting Nationwide Mutual Ins. Co. v. Douglas, 273 S.C. 243, 255, 255 S.E.2d 828 (1979)(Lewis, C.J., dissenting). Where a named insured does not have any insurable interest in the vehicle, the insurance policy is illegal. Id. at 621-22, 274 S.E.2d at 418. Thus, liability insurance is dependent upon an insurable interest and since liability insurance cannot be issued without UM coverage, UM coverage, consequently, is indirectly dependent on the existence of an insurable interest.

The trial court ignored the requirement that an individual must have an insurable interest in the vehicle in which he seeks coverage by making a distinction between liability coverage and UM coverage. The court based its distinction on Unisun Insurance Company v. Schmidt, 339 S.C. 362, 529 S.E.2d 280 (2000) and Hogan v. Home Insurance Company, 260 S.C. 157, 194 S.E.2d 890 (1973). In both cases, the insurance company involved attempted to exclude UM coverage to an insured under a valid policy.

In Schmidt, the defendant, a guest of the named insured, was injured while riding in the named insured's vehicle while driven by an unauthorized driver. 339 S.C. at 364-65, 529 S.E.2d at 281. The insurance company attempted to exclude coverage because once the vehicle was driven without permission it was no longer covered under the policy. Id. at 365, 529 S.E.2d at 281. This court denied coverage, finding when the vehicle was driven without permission it no longer was a vehicle "to which the policy applied." Id. The definition of insured under South Carolina Code Ann. § 38-77-30(7) defines "insured" to mean, "the named insured and, while resident of the same household, the spouse of any named insured and relatives . . . and any person who uses with the consent . . . the motor vehicle to which the policy applies." The supreme court found the "motor vehicle to which the policy applies" is "the motor vehicle designated in the policy" and thus are words of identification and not words of exclusion. Id. at 367, 529 S.E.2d at 282 (citing Davidson v. Eastern Fire & Cas. Ins. Co., 245 S.C. 472, 477-78, 141 S.E.2d 135, 138 (1965)). The court concluded the vehicle qualified as an uninsured vehicle and the defendant was covered under the uninsured portion of the policy. Id.

In this case, the trial court finds the motor vehicle to...