State Farm Fire & Cas. Co. v. Lang
| Decision Date | 27 August 2021 |
| Docket Number | C/A. 2:21-1063-RMG |
| Parties | State Farm Fire and Casualty Company, Plaintiff, v. Alan Joseph Lang and Michael J. Patterson, Defendants. |
| Court | U.S. District Court — District of South Carolina |
Before the Court is Plaintiff State Farm Fire and Casualty Company (“Insurer”)'s motion for partial summary judgment. (Dkt. No. 17). For the reasons set forth below, the Court grants in part and denies in part Insurer's motion for partial summary judgment.
Insurer filed this declaratory judgment action to determine the rights, duties, and obligations of the parties under a homeowner's policy it issued to Defendant Alan Joseph Lang, its insured, bearing policy number 40-CF-A300-3 (the “Policy”).
On November 9, 2020, Defendant Michael J. Patterson filed an amended complaint against Lang in the Court of Common Pleas for Dorchester County, South Carolina captioned Patterson v Lang, No. 2020-CP-18-1518 (the “Underlying Action”). Patterson alleges that, on April 13, 2019, Lang went to a seafood restaurant with a friend. Patterson alleges that Lang was at this restaurant too and that, “for no apparent reason, [Lang] hit [Patterson] in the face.” Patterson alleges that Lang was arrested and charged with Assault &Battery in the third degree. As per his amended complaint in the Underlying Action, Patterson brings causes of action against Lang for: (1) Battery; (2) Assault; and (3) Negligence. (Dkt. No. 1-1).
On April 12, 2021, Insurer initiated the instant action under the Uniform Declaratory Judgment Act, 28 U.S.C. §§ 2201-2202, and Fed.R.Civ.P. 57 to determine whether Insurer has a duty to defend or indemnify Lang for the claims arising out of the Underlying Action. Insurer alleges that an exclusion in the Policy bars coverage. (Dkt. No. 1 at 3).
On May 6, 2021, Lang filed an answer and counterclaims to Insurer's complaint. (Dkt. No. 8). Lang asserts eight counterclaims against Insurer: (1) Bad Faith/Breach of the Duty of Good Faith and Fair Dealing; (2) South Carolina Unfair Trade Practices Act (“SCUTPA”) violation; (3) Negligent Misrepresentation; (4) Breach of Contract; (5) Unjust Enrichment; (6) Frivolous Proceedings Act; (7) Declaratory Judgment: State Farm has a Duty to Defend; and (8) Cumis Counsel and Reimbursement.
On July 27, 2021, Insurer moved for partial summary judgment as to: (1) Insurer's duty to defend Lang in the Underlying Action; and (2) the entirety of Lang's counterclaims. (Dkt. No. 17). Lang filed an opposition. (Dkt. No. 18). Insurer filed a reply. (Dkt. No. 24).
Insurer's motion is fully briefed and ripe for disposition.
To prevail on a motion for summary judgment, the movant must demonstrate that there is no genuine dispute of material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). The Court interprets all inferences and ambiguities against the movant and in favor of the non-moving party. U.S. v. Diebold, Inc., 369 U.S. 654, 655 (1962). Where the moving party has met its burden, the non-moving party must come forth with “specific facts showing that there is a genuine issue for trial.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citing Rule 56(e)); Lilly v. Crum, No. 2:19-CV-00189, 2020 WL 1879469, at *4 (S.D. W.Va. Apr. 15, 2020) () (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986)).
The Policy provides personal liability coverage for bodily injury or property damage. (Dkt. No. 1 at 3). An “occurrence” is defined as “an accident . . . which first results in” either bodily injury or property damage. (Id. at 4). Excluded from coverage, however, is the following:
Section II-Exclusions
1. Coverage L and Coverage M do not apply to:
(Id. at 4).
On September 17, 2020, Patterson filed his original complaint against Lang. (Dkt. No. 185). The complaint brought claims for (1) battery and (2) assault and alleged that Lang, “for no apparent reasons, hit [Patterson] in the face.” (Id. at 4-5). The original complaint included as its Exhibit A “a copy of the police incident reports from the officers that responded to the incident that night.” (Id. at 3). The “Narrative” section of one report indicated that a particular officer spoke with Lang:
I made my way over to FTO Blankenship who was standing with Lang. I told Lang to place his hands behind his back, I placed him into handcuffs which were checked for fit and double locked. I spoke with Lang and asked him what had happened. Lang stated he had previously had a problem with Patterson weeks prior making inappropriate comments to his girlfriend while at the Shuckin Shack. Lang stated tonight Patterson continued to make more inappropriate comments to Lang's girlfriend and he became angry with Patterson and felt he had to protect his girlfriend and struck him.
(Id. at 9) (emphasis added). Another report was drafted by “Garcia, K” and indicated that Garcia also “spoke with the suspect, Alan Lang, [w]ho stated nothing had occurred, nothing physical had taken place and that this was a misunderstanding.” (Id. at 11). Lang emailed Insurer a copy of the original complaint on September 24, 2020. (Dkt. No. 28 at 8).
On October 7, 2020, Insurer sent Lang a coverage denial letter which found that the original complaint did not trigger coverage per the above-described exclusion. (Dkt. No. 17-2 at 21-24).
On November 9, 2020, Patterson filed an amended complaint. (Dkt. No. 1-1). The amended complaint brought claims for (1) battery, (2) assault, and (3) negligence. The amended complaint was almost identical to the original complaint but for its addition of a negligence claim. As it regarded negligence, the amended complaint alleged that:
(Id. at 6-7). Lang's personal counsel provided a copy of the amended complaint to Insurer on November 18, 2020. (Dkt. No. 18 at 11).
On November 23, 2020, Lang filed an answer to the amended complaint in which he asserted factual denials and affirmative defenses including self-defense, defense of others, provocation, comparative negligence, intervening negligence, and sudden emergency. (Dkt. No. 19-5). On November 24, 2020, Lang's attorney provided Insurer a copy of Lang's answer to the amended complaint. (Dkt. No. 19-6). Subsequently, “[i]n mid-December 2020, [Insurer] retained defense counsel for Lang” in the Underlying Action under a reservation of rights. (Dkt. No. 18 at 12); (Dkt. No. 1 ¶ 13) (“State Farm is currently defending Lang in connection with the Underlying Lawsuit under a full reservation of rights.”).
Under South Carolina law, “[q]uestions of coverage and the duty of a liability insurance company to defend a claim brought against its insured are determined by the allegations of the complaint.” City of Hartsville v. South Carolina Mun. Ins. & Risk Fin. Fund, 382 S.C. 535 543 (2009) (citing C.D. Walters Const. Co. v. Fireman's Ins. Co. of Newark, N.J., 281 S.C. 593, 594 (Ct. App. 1984)). If the “underlying complaint creates a possibility of coverage under an insurance policy, the insurer is obligated to defend” its insured. Id. at 544 (citing Gordon-Gallup Realtors, Inc. v. Cincinnati Ins. Co., 274 S.C. 468 (1980)). Moreover, “[a]lthough a determination of an insurer's duty to defend is dependent upon the complaint, an analysis of this duty involves the allegations of the complaint and not the specifically identified causes of action.” Id. at 544-45. “An insurer's duty to defend may arise from facts outside of the complaint that are known to the insurer.” Id. at 545.
It is the insured's burden to establish that a claim falls within the coverage of an insurance contract. Jensen v. Selective Ins. Co. of Se., No. 4:12-cv-02133-RBH, 2013 WL 3148341, at *2 (D.S.C. June 19, 2013) (citing Gamble v. Travelers Ins. Co., 251 S.C. 98, 102 (1968)). Alternatively, the insurer shoulders the burden of establishing the exclusions to coverage and the exclusion is construed “most strongly” against the insurer. Id. (citing Boggs v. Aetna Cas. & Sur. Co., 272 S.C. 460, 252 S.E.2d 565, 568 (1979)). However, an insured party bears the burden of proving an exception to an exclusion. Ross Dev. Corp. v. PCS Nitrogen Inc., Nos. 12-2059, 12 2454, 2013 WL 2440844, at *3 (4th Cir. June 6, 2013) (citing Helena Chem. Co. v. Allianz Underwriters Ins. Co., 357 S.C. 631, 636, 594 S.E.2d 455, 460 n.5 (2004)).
The Court denies Insurer's motion for summary judgment as to its duty to defend Lang. Attached to the original complaint-as well as the amended complaint-were the police reports discussed supra. These reports contained statements from Lang that he acted in self-defense or defense of other another while striking Patterson. See (Dkt. No. 18-9 at 9, 11). These allegations[1]created a “possibility of coverage under” the Policy. See City of Hartsville, 382 S.C. at 543. And while the original and amended complaints certainly contained allegations contrary to Lang's statements...
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