Nationwide Mut. Ins. Co. v. Tate

• Decision Date: 04 October 1993
• Docket Number: No. 2093,2093
• Citation: 313 S.C. 444,438 S.E.2d 266
• Parties: NATIONWIDE MUTUAL INSURANCE COMPANY, Appellant, v. Richard Arnold TATE, and Unisun Insurance Company, f/k/a American Mutual Fire Insurance Company, Defendants, of whom Unisun Insurance Company, f/k/a American Mutual Fire Insurance Company is Respondent. . Heard
• Court: South Carolina Court of Appeals

Page 266

438 S.E.2d 266

313 S.C. 444

NATIONWIDE MUTUAL INSURANCE COMPANY, Appellant, v. Richard Arnold TATE, and Unisun Insurance Company, f/k/a American Mutual Fire Insurance Company, Defendants of whom Unisun Insurance Company, f/k/a American Mutual Fire Insurance Company is Respondent.

No. 2093.

Court of Appeals of South Carolina.

Heard Oct. 4, 1993.

Decided Dec. 6, 1993.

Stephen D. Baggett and Roy R. Hemphill, both of Burns, McDonald, Bradford, Patrick & Dean, Greenwood, for appellant.

Theron G. Cochran, of Love, Thornton, Arnold & Thomason, Greenville, for respondent.

HOWELL, Chief Judge:

This is a declaratory judgment action brought by Nationwide Insurance Company to determine whether Unisun Insurance Company had a continuing duty to defend a lawsuit involving one of Unisun's insureds after Unisun had settled the claim and paid its limits of liability under one of its insurance policies. The trial court found that Nationwide had no standing to assert any claim against Unisun on its own behalf or on behalf of Unisun's insured. ¹ Nationwide appeals. We affirm.

Richard Tate was injured when his automobile collided with an automobile operated by Barry Wilson. At the time of the accident, Unisun provided liability insurance coverage to Wilson . Nationwide provided underinsured motorist coverage to Tate.

Tate and his wife sued Wilson for injuries sustained as a result of the accident. Before trial, however, Unisun negotiated a settlement under the terms of which Unisun tendered its limits of liability coverage to the Tates. The Tates signed a "Covenant Not to Execute and Receipt and Release of Liability Benefits." The agreement released Wilson from any further liability resulting from the accident. In addition, it released Unisun from any further duty to defend. The document also prohibited the Tates from executing against Wilson's personal assets in the event the Tates were successful and a judgment was rendered in their favor.

Wilson's attorneys then moved for an order relieving them as counsel. The court granted the motion. The case remained on the trial roster with no one representing Wilson.

Pursuant to S.C.Code Ann. § 38-77-160 (1989 & Supp.1992), ² Nationwide appeared on Wilson's behalf to defend the action and protect its interest as the underinsured carrier. The jury returned a verdict in favor of the Tates. The award was in excess of the amount paid by Unisun.

The central issue in this case is whether Nationwide, as an underinsured motorist carrier, may enforce a duty to defend on Unisun, a liability carrier, in a tort action. The trial court held that Nationwide did not have standing to raise this issue. We agree.

We find nothing in the record to suggest Nationwide has standing to enforce a policy right of the insured, Wilson. Wilson's policy regarding liability coverage reads, in part, as follows:

We will pay damages for:

1. Bodily injury; or

2. Property damage, ...;

for which any covered person becomes legally responsible because of an auto accident. We will settle or defend ... any claim or suit asking for these damages.... Our duty to settle or defend ends when our limit of liability for this coverage has been exhausted.

Giving the language of the policy its plain meaning, a defense will be provided only for those persons identified in the policy, to wit, "covered person[s]." Thus, there is nothing in the policy which supports Nationwide's contention that Unisun had a duty to defend Nationwide's interest as an underinsured carrier once the ultimate defense, the absolute protection from any liability, had been afforded to the insured.

A liability insurer has two separate and distinct duties to the insured. First, the insurer is obligated to pay sums the insured becomes obligated to pay. Second, the insurer must defend any suit alleging bodily injury or property damage seeking damages payable under the terms of the policy. Sloan Construction Co. v. Central Nat'l Ins. Co., 269 S.C. 183, 236 S.E.2d 818 (1977).

Our Supreme Court has held a tender of policy limits does not relieve an insurer's duty to defend its insured. Nationwide Mutual Ins. Co. v. Simmonds, --- S.C. ----, 434 S.E.2d 277 (1993) (emphasis added). In Simmonds, the Court noted " '[t]he defense of ... suits by the insurer is a valuable right of the insured for which [the insured ] pays and to which [the insured ] is entitled by the very words of the policy.' " Simmonds, --- S.C. at ----, 434 S.E.2d at 278 (quoting American Casualty Co. v. Howard, 187 F.2d 322, 327 (4th Cir.1951)) (emphasis added). It is clear these holdings are for the protection of the insured. We find no reason to extend this rule and recognize a duty to defend in order to protect underinsured motorist carriers.

In the case at bar, Unisun has satisfied...