Snyder v. State Farm Mut. Auto. Ins. Co., C.A. No. 2:07-CV-00433-PMD.

• Decision Date: 22 February 2008
• Docket Number: C.A. No. 2:07-CV-00433-PMD.
• Citation: 586 F.Supp.2d 453
• Court: U.S. District Court — District of South Carolina
• Parties: Mark SNYDER, Plaintiff, v. STATE FARM MUTUAL AUTOMBILE INSURANCE COMPANY, Defendant.

Page 453

586 F.Supp.2d 453

Mark SNYDER, Plaintiff, v. STATE FARM MUTUAL AUTOMBILE INSURANCE COMPANY, Defendant.

C.A. No. 2:07-CV-00433-PMD.

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

February 22, 2008.

Jarrel L. Wigger, Wigger Law Firm, North Charleston, SC, for Plaintiff.

Charles R. Norris, Nelson, Mullins, Riley and Scarborough, LLP, Charleston, SC, for Defendant.

ORDER

PATRICK MICHAEL DUFFY, District Judge.

This matter is before the court on Defendant State Farm Mutual Automobile Insurance Company's ("State Farm") Motion for Summary Judgment pursuant to Federal Rule 12(b)(6). For the reasons set forth herein, Defendant's Motion is granted.

BACKGROUND

On July 17, 2002 Plaintiff Mark Synder ("Snyder") was riding a bicycle when he was struck by a motor vehicle driven by Chris Knight ("Knight"). Knight was at fault in causing this accident. As a result of this accident, Snyder suffered very serious spinal injuries which left him partially disabled.

The vehicle driven by Knight had a $25,000 liability insurance policy with Nationwide Insurance Company ("Nationwide"). Knight also had an excess coverage policy on the vehicle through State Farm in the amount of $50,000, giving him $75,000 in total liability coverage on the vehicle. Snyder had a UIM coverage policy with State Farm in the amount of $100,000, and UIM coverage under a policy issued to Nicole Bufano that provided $15,000 of coverage in the event of being a pedestrian involved in an accident. This gave Snyder a total UIM coverage amount of $115,000.

On January 19, 2004, Snyder received the $25,000 in liability insurance from Nationwide. On June 28, 2004, Snyder sued Knight in the Court of Common Pleas of Charleston County. State Farm retained counsel to defend the case, as provided for in § 38-77-160 of the South Carolina Code. In November 2005, after the completion of discovery in the case, Snyder received the $50,000 coverage limit from State Farm under Knight's excess liability policy.

Throughout this time period, State Farm claim representative Jane Coleman ("Coleman") was researching Snyder's claim for payments under Knight's UIM policy. Coleman requested copies of all of Snyder's medical records. State Farm determined that Snyder's medical claims were worth between $75,000 and $100,000. Given that Snyder had received $75,000 in liability coverage, State Farm believed that this meant that Snyder was only entitled to receive between zero and $25,000 in UIM coverage. Snyder's evaluation of his medical claims was, unsurprisingly, dramatically different in valuation. Snyder, through his attorney, made a written demand for $300,000, or the $115,000 in policy limits of Snyder's UIM policies.

The two sides commenced settlement negotiations. On November 15, 2005, Plaintiff contacted State Farm and offered to settle the case for the limits of Snyder's UIM coverage, excluding the UIM coverage to which he was entitled under Bufano's policy, in the amount of $100,000. On December 28, State Farm responded with a counteroffer of a summary jury trial, in which Snyder would have had a minimum recovery of nothing, a maximum recovery of $115,000, would have had to go through a trial, and would have been precluded from appealing the jury's verdict and from asserting a claim against State Farm for bad faith. On January 11, 2006, Plaintiff responded with a counteroffer of a summary jury trial at which the minimum recovery was fixed at $50,000. On January 13, State Farm responded to this by proposing a summary jury trial at which the minimum recovery was set at $25,000.¹

On January 30, 2006, Plaintiff again contacted State Farm and offered to settle for his UIM policy limit of $100,000. State Farm refused this offer. The week before the case was to go to trial, Plaintiff contacted State Farm and offered to settle the case for $75,000. Once again, State Farm refused. Finally, on the day the trial was to begin, Plaintiff reduced his demand to $50,000 if State Farm would settle before opening statements. State Farm refused this offer as well.

At no point in the settlement negotiations did State Farm propose any offer which would not have forced Snyder to go through some sort of trial to get his UIM benefits. While State Farm did propose that Snyder could go to a summary jury trial where the jury would have to award him at least $25,000, Snyder never had the option of simply taking the $25,000 payment. This is amply supported by the record, and is acknowledged numerous times by State Farm employees involved with the case during deposition testimony.²

Snyder declined to go to a summary jury trial, and instead took the case to full trial in the Court of Common Pleas. The trial took place in February 2006. Shortly before trial, Snyder visited his physician and learned that he would need additional surgery. Snyder attempted to delay the trial in order to depose this physician and get more information regarding this new condition so that this information could be brought before the jury, but State Farm refused to consent to the delay. At the conclusion of the trial, the jury returned a verdict for Snyder against Knight in the amount of $345,000. At this point, State Farm paid Snyder the maximum limit of his UIM coverage in the amount of $115,000.³ Upon receiving these UIM forms, Plaintiff signed a form acknowledging full satisfaction of the verdict. While Plaintiff certainly expressed a preference not to experience the stress of going through a trial, it is not disputed that Snyder benefitted from the trial financially.⁴

On January 23, 2007, Snyder filed suit in the Charleston County Court of Common Pleas against .State Farm for negligence, bad faith refusal to pay benefits, unfair trade practices, breach of contract, improper claims practices, and waiver and estoppel. Snyder is seeking actual and punitive damages, as well as litigation costs. State Farm removed this action to federal court on February 13, on the basis of diversity jurisdiction. After the conclusion of discovery, on November 26, State Farm moved for summary judgment in this matter. On January 4, 2008, Plaintiff issued a Response in Opposition to this motion. Defendant replied to this on January 7. Plaintiff filed a Sur Reply on January 11.⁵

STANDARD OF REVIEW

To grant a motion for summary judgment, the court must find that "there is no genuine issue as to any material fact." Fed.R.Civ.P. 56(c). 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, 123-24 (4th Cir.1990). "[W]here the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, disposition by summary judgment is appropriate." Teamsters Joint Council No. 83 v. Centra, Inc., 947 F.2d 115, 119 (4th Cir.1991). "[T]he plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The "obligation of the nonmoving party `is particularly strong when the nonmoving party bears the burden of proof.'" Hughes v. Bedsole, 48 F.3d 1376, 1381 (4th Cir.1995) (quoting Pachaly v. City of Lynchburg, 897 F.2d 723, 725 (4th Cir.1990)). Summary judgment is not "a disfavored procedural shortcut," but an important mechanism for weeding out "claims and defenses [that] have no factual basis." Celotex, 477 U.S. at 327, 106 S.Ct. 2548.

ANALYSIS

I. Snyder's Claim for Bad Faith Refusal to Pay

"[I]f an insured can demonstrate bad faith or unreasonable action by the insurer in processing a claim under their mutually binding insurance contract, he can recover consequential damages in a tort action." Nichols v. State Farm Mut. Auto. Ins. Co., 279 S.C. 336, 340, 306 S.E.2d 616, 619 (1983). Furthermore, a bad faith claim may exist even in the absence of any violation of an insurance contract provision, as "the benefits due an insured are not limited solely by those expressly set out in the contract." Tadlock Painting Co. v. Maryland Cas. Co., 322 S.C. 498, 503, 473 S.E.2d 52, 55 (1996). The elements of a bad faith refusal to pay action are: (1) the existence of a contract of insurance between the parties; (2) refusal by the insurer to pay benefits due under the contract; (3) resulting from the insurer's bad faith or unreasonable action; and (4) causing damage to the insured. Howard v. State Farm Mut. Auto. Ins. Co., 316 S.C. 445, 451, 450 S.E.2d 582, 586 (1994). It is undisputed here that Snyder and State Farm had an insurance contract for UIM coverage, and it is undisputed that State Farm was unwilling to pay Snyder benefits pursuant to that contract, to which a jury ultimately found that he was entitled. What is left for the court to decide on Snyder's bad faith refusal to pay claim, then, is whether this refusal was a result of bad faith or unreasonableness on the part of State Farm, and whether this caused damage to Snyder.

The first issue the court must decide is whether State Farm did, in fact, have a duty to act in good faith toward Snyder. This court's decision in Myers v. State Farm Mutual Automobile Insurance Co. addressed the issue of when the insurer of a UIM policy has a duty to act in good faith. 950 F.Supp. 148 (D.S.C.1997). That case involved a plaintiff who had filed suit against the at-fault driver, served notice of this claim to her UIM insurer, and then settled her claims against the at-fault driver. At this point, the UIM insurer refused to pay the plaintiff her UIM benefits, and...