Peterson v. West American Ins. Co.

• Decision Date: 01 June 1999
• Docket Number: No. 3003.,3003.
• Citation: 336 S.C. 89,518 S.E.2d 608
• Court: South Carolina Court of Appeals
• Parties: Lela PETERSON (Individually and as Administratrix of the Estate of Steve Tarver, Deceased), as Assignee of Margaret Webb Walker, Appellant, v. WEST AMERICAN INSURANCE COMPANY, Respondent.

336 S.C. 89

518 S.E.2d 608

Lela PETERSON (Individually and as Administratrix of the Estate of Steve Tarver, Deceased), as Assignee of Margaret Webb Walker, Appellant, v. WEST AMERICAN INSURANCE COMPANY, Respondent.

No. 3003.

Court of Appeals of South Carolina.

Submitted May 11, 1999.

Decided June 1, 1999.

Glenn V. Ohanesian, of Ohanesian & Ohanesian; and O. Fayrell Furr, Jr., of Furr & Henshaw, both of Myrtle Beach, for Appellant.

James D. Brice and Jennifer E. Johnsen, both of Gibbes, Gallivan, White & Boyd, of Greenville, for Respondent.

ANDERSON, Judge:

This is an insurance case involving the question whether automobile coverage was effectively cancelled by the policy-holder in the absence of notice to the South Carolina Department of Highways and Public Transportation (the Highway Department). Lela Peterson's son, Steve Tarver, was killed while riding in a car driven by E. Michael Galloway. The car belonged to Margaret Webb Walker. Peterson sought actual and punitive damages from West American Insurance Company, Walker's insurance carrier. The circuit court granted West American summary judgment, finding Walker had voluntarily cancelled the insurance policy prior to the date of the automobile accident. Peterson appeals, arguing the cancellation was not effective in the absence of notice to the Highway Department. We affirm.¹

FACTUAL/PROCEDURAL BACKGROUND

Walker obtained an automobile insurance policy on November 23, 1990 from West American through the Abercrombie Insurance Agency. The policy was for the stated six-month term of November 23, 1990 to May 23, 1991.

On or about November 27, 1990, Walker gave her car to Galloway, a neighbor, so that he could repair the car. Galloway took possession of the car and never returned. On December 12, 1990, Walker reported her car stolen to the Simpsonville Police Department. Walker spoke with an Abercrombie agent on February 15, 1991 and sought to cancel her policy. West American issued a cancellation notice and sent Walker a refund check on February 25, 1991. West American designated November 28, 1990 as the policy termination date on the notice. However, the Highway Department never received a Form FR-4, Notice of Cancellation of Policy.

On April 14, 1991, Galloway wrecked Walker's car in a single-car accident in Mississippi. Galloway, who had been drinking, lost control of the car and hit a tree. Steve Tarver, a passenger in the back seat of the car, died as a result of his injuries in the wreck.

Peterson, Tarver's mother, was appointed administratrix of Tarver's estate. Prior to the appointment, Peterson's attorney informed Walker of the wreck and sought information on Walker's insurance company. Walker referred the letter to West American. West American declined coverage, asserting Walker cancelled her policy prior to the accident. Thereafter, on several occasions West American suggested Walker retain personal counsel and advised her they would not provide her with a defense.

Peterson's attorney sought the limits of the policy from West American. West American continued to refuse liability, claiming Galloway stole the car and Walker cancelled the policy prior to the accident.

Peterson brought a wrongful death action against Galloway, alleging he drove the car in excess of 100 m.p.h. while intoxicated before crashing, and a negligent entrustment action against Walker. In 1993, the Mississippi circuit court awarded a default judgment against Walker and Galloway for $544,350. South Carolina circuit court Judge McKellar enrolled the foreign judgment in South Carolina for the principal amount plus post-judgment interest of $105,231.07.

Walker assigned her claims against West American to Peterson on July 5, 1995. Peterson then sued West American for bad faith refusal to pay benefits. Peterson alleged West American failed to perform its duty to defend Walker under the terms of the policy, resulting in the default judgment; failed to properly cancel the policy under the law; and failed to pay benefits due under the policy. West American continued to refute liability, contending, among numerous defenses, that Walker properly cancelled the insurance policy prior to the accident.

West American and Peterson filed motions for summary judgment, which were heard by Judge Pyle. The circuit court granted summary judgment in favor of West American. The court found West American validly cancelled the insurance policy pursuant to Walker's request, and Peterson, who stood in the shoes of Walker, failed to establish the existence of a mutually binding contract. The circuit court subsequently denied Peterson's Rule 59, SCRCP motion. Peterson appeals.

ISSUES

I. Did the court err in failing to find the insurance policy remained in effect because West American did not notify the Highway Department that Walker's policy had been cancelled?

II. Did the court err in finding West American properly cancelled the policy in accordance with the relevant policy and statutory provisions?

III. Did the court err in finding the insurance policy was not in effect at the time of the automobile accident since the alleged negligent entrustment occurred while the policy remained in effect?

STANDARD OF REVIEW

A trial court should grant a motion for summary judgment when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Rule 56(c), SCRCP. See also Tupper v. Dorchester County, 326 S.C. 318, 487 S.E.2d 187 (1997)

.

An appellate court reviews the granting of summary judgment under the same standard applied by the trial court pursuant to Rule 56(c), SCRCP: Summary judgment is properly upheld 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. Baughman v. American Tel. & Tel. Co., 306 S.C. 101, 410 S.E.2d 537 (1991). See also 5 Am.Jur.2d Appellate Review § 700 (1995) ("In reviewing a grant of summary judgment, the appellate court is limited to the evidence that was before the trial court and applies the same standard of review as did the trial court.").

Under Rule 56(c), SCRCP, the party seeking summary judgment has the initial burden of demonstrating the absence of a genuine issue of material fact. Baughman, 306 S.C. 101,410 S.E.2d 537. Once the party moving for summary judgment meets the initial burden of showing an absence of evidentiary support for the opponent's case, the opponent cannot simply rest on mere allegations or denials contained in the pleadings. Rather, the non-moving party must come forward with specific facts showing there is a genuine issue for trial. Rule 56(e), SCRCP; SSI Med. Servs., Inc. v. Cox, 301 S.C. 493, 392 S.E.2d 789 (1990); NationsBank v. Scott Farm, 320 S.C. 299, 465 S.E.2d 98 (Ct.App.1995).

In determining whether any triable issues of fact exist, the evidence and all reasonable inferences therefrom must be viewed in the light most favorable to the non-moving party. Summer v. Carpenter, 328 S.C. 36, 492 S.E.2d 55 (1997); City of Columbia v. American Civil Liberties Union, 323 S.C. 384, 475 S.E.2d 747 (1996).

LAW/ANALYSIS

I. Did the insurance policy remain in effect because West American failed to notify the Highway Department that Walker's policy was cancelled?

Peterson's first argument is two-fold: (a) whether §§ 56-10-240 and 56-10-40 of the South Carolina Code required West American to notify the Highway Department when Walker's policy was cancelled; and (b) if so, whether West American's failure to notify the Highway Department continued the policy in effect.

A. Failure to notify Highway Department of voluntary cancellation.

We hold Walker's voluntary cancellation of her insurance policy absolved West American's responsibilities under §§ 56-10-240 and 56-10-40 because these provisions apply when the insurer cancels or refuses to renew a policy, not when the insured voluntarily cancels² a policy.

Section 56-10-240 provides in pertinent part:

(A) If, during the period for which it is licensed, a motor vehicle is or becomes an uninsured motor vehicle, then the vehicle owner immediately shall obtain insurance on the vehicle or within five days after the effective date of cancellation or expiration of his liability insurance policy surrender the motor vehicle license plates and registration certificates issued for the motor vehicle. If five working days after the last day to pay an automobile liability insurance premium ... a motor vehicle is an uninsured motor vehicle, the insurer shall give written notice ... within ten days after the five-day period ends ... to the department of the cancellation or refusal to renew under the following circumstances:

(1) the lapse or termination of such insurance or security occurs within three months of issuance, provided that this subsection only applies to new policies, and not renewal or replacement policies; or

(2) the lapse or termination occurs after three months for a resident who fails one or more of the objective standards prescribed in Section 38-73-455.

(B) The department, in its discretion, may authorize insurers to utilize alternative methods of providing notice of cancellation of or refusal to renew to the department. The department may not reissue registration certificates and license plates for that vehicle until satisfactory evidence has been filed by the owner or by the insurer who gave the cancellation or refusal to renew notice to the department that the vehicle is insured.... The department shall give notice by first class mail of the cancellation or suspension of registration privileges to the vehicle owner at his last known address.

S.C.Code Ann. § 56-10-240 (Supp.1998) (emphasis added).

This provision explicitly references only an insurer's cancellation notice. The emphasized portion illustrates how the provision...