South Carolina State Budget & Control Bd., Div. of General Services, Ins. Reserve Fund v. Prince, 23382
| Citation | 304 S.C. 241,403 S.E.2d 643 |
| Decision Date | 12 December 1990 |
| Docket Number | No. 23382,23382 |
| Court | South Carolina Supreme Court |
| Parties | , 67 Ed. Law Rep. 315 SOUTH CAROLINA STATE BUDGET & CONTROL BOARD, DIVISION OF GENERAL SERVICES, INSURANCE RESERVE FUND, Appellant, v. Atlee PRINCE, Tommy Dabbs, Naomi Sanders, and Sumter County School District Two, Respondents. . Heard |
Charles E. Carpenter, Jr. Deborah L. Harrison, George C. Beighley of Richardson, Plowden, Grier and Howser, all of Columbia, for appellant.
Kenneth L. Childs, David E. Dubberly of Childs, Duff, St. Pierre and Hardin, P.A., Columbia, for Sumter County School Dist. Two, respondent.
Randall M. Chastain, Columbia, for Atlee Prince, respondent.
J. Edward Bell, III, Bobby R. Bagley of Bell and Bagley, Sumter, for Tommy Dabbs and Naomi Sanders, respondent.
This declaratory judgment action was initiated by appellant South Carolina State Budget and Control Board, Division of General Services, Insurance Reserve Fund (Fund), against respondents Atlee Prince (Prince), Tommy Dabbs (Dabbs), and Naomi Sanders (Sanders), all members of Sumter County School Board (School Board), and against Sumter County School District Two (School District). The School District held an insurance policy issued by the Fund which provided coverage to members of the School Board. The Fund sought a declaration of whether coverage existed under the insurance policy for a judgment against Prince for defamatory statements he made about Sanders and Dabbs. The Fund appeals from the trial judge's order which held that the jury award of actual and punitive damages was covered under the policy. We affirm.
Respondents Prince, Sanders, and Dabbs, were members of the School Board. Sanders was the Chairman of the School Board and the immediate past Vice-Chairman, Prince was Vice-Chairman and Chairman of the School Board's Finance Committee, and Dabbs was the immediate past Chairman. Prince was elected as a member of the School Board when Dabbs was Chairman. Prince wanted to be Chairman. Prince claims he agreed to nominate and support Sanders to succeed Dabbs as Chairman with the understanding that Prince would serve as Vice-Chairman, but would be elected Chairman at the next election. However, at the next election, Sanders opposed Prince and Sanders was reelected.
Prince claims that his initial campaign for the School Board position arose out of his concerns about possible financial mismanagement in the School District. Due to his concerns, and his desire to investigate the allegations of financial impropriety, Prince established the School Board's Standing Committee on Finance. Prince was elected Chairman of the Committee. In this position, he attempted to investigate the financial structure of the School District. Prince claims that he discovered that the School District lacked a viable internal control system, thus making it impossible to track the thirty million dollars that flowed through the School District every year. This discovery led Prince to urge the School Board to hire an auditing firm to do a special audit. However, Prince claims that certain School Board members attempted to impede the special audit.
With his election as Chairman of the School Board blocked by Sanders and his efforts to obtain an audit thwarted, Prince asserts that he believed that his only recourse was to inform the public of his concerns, in the hope that the public would put pressure on the School Board to investigate the financial status of the School District. Thus, on July 7, 1987, Prince held a news conference at the District Administration Office. Prince stated that the purpose of the news conference was to attract public attention to "an apparent pattern of malfeasance, fraud, mismanagement [of district funds], illegal bid-solicitation practices, kickbacks, and bribery" within the Dabbs/Sanders administration.
As a result of Prince's statements at the press conference, Sanders and Dabbs initiated separate actions against Prince, in both his individual and official capacities, for defamation, conspiracy, and republication of defamatory remarks. The actions were consolidated for trial. On the motion of Prince, the School District was added as a defendant. However, during the trial, the trial judge directed a verdict in favor of the School District based on his determination that the School District could not be liable under the South Carolina Tort Claims Act, S.C.Code Ann. § 15-78-10 to 15-78-190 (Supp.1989).
The trial judge submitted the case to the jury solely on the issues of whether the remarks were made with actual malice, and whether these remarks resulted in damage to Sanders' and Dabbs' reputations. The jury returned a verdict in favor of each plaintiff in the sum of $1,250,000.00 in actual damages and $750,000.00 in punitive damages. The trial judge denied Prince's post-trial motions for judgment notwithstanding the verdict and a new trial. 1
Although the Fund defended Prince and the School District during the trial pursuant to the insurance policy it had issued to the School District, it did so under a reservation of rights. Accordingly, at the conclusion of the trial, the Fund brought this declaratory judgment action asserting that the policy does not provide coverage for the judgment against Prince because: (1) Prince was not an insured under the policy as he was acting outside the course of his volunteer employment with the School District; (2) Prince's defamation of Sanders and Dabbs was not an "occurrence" as defined in the policy since his conduct was intentional; (3) it would contravene public policy to provide coverage for defamation; and (4) punitive damages are not recoverable under the policy. The Fund appeals the trial judge's finding that the policy provided coverage to Prince.
In defining "person insured", the Fund's policy provides that: "[a]ny volunteer employee of the entity designated in the declaration as 'named insured' is an insured, but only while the volunteer employee is acting in the course of his or her volunteer employment for the entity." It is undisputed that Prince was a volunteer employee. The dispositive issue is whether Prince was "acting in the course of his volunteer employment" when he made the defamatory accusations. The trial judge held that Prince was acting in the course of his volunteer employment and thus was an insured under the policy. We agree.
The Fund argues that we are constrained by the South Carolina Tort Claim Act (Act), including its definition of "scope of official duty", S.C.Code Ann. § 15-78-30(i) (Supp.1989), in determining whether Prince was acting within the course of his employment. However, the Act does not provide immunity to employees whose conduct constitutes actual malice. 2 S.C.Code Ann. § 15-78-70(b) (Supp.1989). Consequently, it is the language of the policy, and not of the Act, which is determinative. The policy does not limit coverage to acts within the "scope of official duty", but instead utilizes broader language and provides coverage to an employee "acting in the course ... of employment."
Since the trial judge could not find any case law which interpreted this phrase in connection with an insurance policy, he relied on the interpretation of this phrase under general master/servant liability and workers' compensation principles. We find that this was reasonable in light of the principle that insurance contracts are generally construed against the party who prepares them and liberally in favor of the insured. McCracken v. Gov't Employees Ins. Co., 284 S.C. 66, 325 S.E.2d 62 (1985). In defining the phrase "in the course of employment" in a workers' compensation case, we stated that:
an employee, to be entitled to compensation, need not be in the actual performance of the duties for which he was expressly employed in order for his injury or death to be in the 'course of employment' and thus compensable. It is sufficient if the employee is engaged in a pursuit or undertaking consistent with his contract of hire and which in some logical manner pertains to or is incidental to his employment.
Beam v. State Workmens' Compensation Fund, 261 S.C. 327, 332, 200 S.E.2d 83, 86 (1973).
In Crittenden v. Thompson-Walker Co., Inc., 288 S.C. 112, 341 S.E.2d 385 (Ct.App.1986), the Court of Appeals discussed scope of employment in the master-servant context. In Crittenden, an employee of Thompson-Walker physically assaulted the plaintiff because he refused to pay a bill for work performed by Thompson-Walker. The dispositive issue was whether the employee was acting outside the scope of his employment when he assaulted the plaintiff. In finding the employer liable, the Court of Appeals held:
it is not necessary to find the particular act creating liability was within the servant's authority. Nor is it necessary that the assault should have been made as a means or for the purpose of performing the work the servant was employed to do. If the servant is doing some act in furtherance of the master's business, he will be regarded as acting within the scope of his employment, although he may exceed his authority.... If there is doubt as to whether the servant in injuring a third party was acting at the time within the scope of his employment, the doubt will be resolved against the master....
288 S.C. at 115-116, 341 S.E.2d at 387 (citations omitted).
Applying these principles, we...
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