UNITED SERVICES AUTO. ASS'N v. Markosky, No. 3157.

• Court: Court of Appeals of South Carolina
• Writing for the Court: HOWARD.
• Citation: 530 S.E.2d 660,340 S.C. 223
• Parties: UNITED SERVICES AUTOMOBILE ASSOCIATION, Respondent, v. Douglas J. MARKOSKY and State Farm Mutual Automobile Insurance Company, Defendant, of whom State Farm Mutual Automobile Insurance Company is, Appellant, v. Danette Frazier, Third Party Defendant.
• Docket Number: No. 3157.
• Decision Date: 24 April 2000

340 S.C. 223
530 S.E.2d 660

UNITED SERVICES AUTOMOBILE ASSOCIATION, Respondent,
v.
Douglas J. MARKOSKY and State Farm Mutual Automobile Insurance Company, Defendant, of whom State Farm Mutual Automobile Insurance Company is, Appellant,
v.
Danette Frazier, Third Party Defendant

No. 3157.

Court of Appeals of South Carolina.

Heard January 12, 2000.

Decided April 24, 2000.

340 S.C. 224

Timothy A. Domin and Samuel R. Clawson, both of Clawson & Staubes, of Charleston, for appellant

Charles H. Gibbs, Jr., of Sinkler & Boyd, of Charleston, for respondent.

HOWARD, Judge:

United Services Automobile Association (USAA) brought this action seeking a determination that State Farm Mutual Automobile Insurance Company owes coverage to the full extent of its insured's liability policy limits. State Farm appeals the trial court's grant of summary judgment to USAA, asserting that it is only liable for the minimum statutory limits, rather than the full policy amount, where its insured breached the cooperation clause in the policy. We reverse.

FACTUAL/PROCEDURAL BACKGROUND

On November 20, 1994, Douglas J. Markosky was injured when the bicycle he was riding collided with a motor vehicle operated by Danette Frazier. Both parties claimed the other's negligence caused the accident. At the time of the accident, State Farm provided liability coverage to Frazier in amounts up to $50,000 per person, not to exceed $100,000 per accident. The policy's terms required Frazier to send State Farm "at once every demand, notice or claim made and every summons or legal process received." The policy also imposed upon Frazier a duty to cooperate with State Farm in the settlement or litigation of claims.

340 S.C. 225

Markosky sued Frazier as a result of the accident. Frazier was served with the summons and complaint on August 29, 1995. She failed to answer or notify State Farm in any way that she had been served. The court placed her in default on or about September 29, 1995. State Farm was unable to obtain relief from the default, and the parties have stipulated that State Farm was prejudiced when it lost its right to contest Frazier's liability, assert Markosky's comparative negligence, and demand a jury trial on damages

Markosky's total damages as a result of the accident are at least $65,000, and the parties have agreed that is a reasonable settlement amount. State Farm paid Markosky $15,000, but denies any additional coverage under the policy due to Frazier's failure to notify State Farm of the action. USAA, as Markosky's underinsured motorist coverage carrier, paid $50,000 to settle his total damages. In exchange, Markosky signed a policy release, assignment, and settlement agreement.

USAA then brought this declaratory judgment action to determine whether the State Farm policy affords an additional $35,000 in liability coverage to Frazier for the accident. State Farm and USAA agreed that State Farm would reimburse USAA for the UIM benefits paid to Markosky if such a determination were made.

The trial court granted USAA summary judgment, finding State Farm's attempt to avoid any coverage in excess of the mandatory minimum limits contravenes the requirements of the Insurance Code, S.C.Code § 38-77-10 et seq. (1989 & Supp.1999), and the Financial Responsibility Act, S.C.Code Ann. § 56-9-10 et seq. (1991 & Supp.1999). It held the State Farm policy provided Frazier a total of $50,000 in liability insurance coverage for Markosky's claims and damages.

STANDARD OF REVIEW

"Summary judgment is appropriate when it is clear there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law." Wilson v. Moseley, 327 S.C. 144, 146, 488 S.E.2d 862, 863 (1997) (citation omitted). "In ruling on a motion for summary judgment, the evidence and all inferences which can be reasonably drawn therefrom

340 S.C. 226

must be viewed in the light most favorable to the non-moving party." Id.

DISCUSSION

State Farm asserts unambiguous policy terms and conditions, as applied to coverage in excess of the minimum limits required by law, do not contravene the applicable statutory scheme. We agree.

"[I]nsurers have the right to limit their liability and to impose whatever conditions they desire upon an insured, provided they are not in contravention of some statutory inhibition or public policy." Pennsylvania Nat'l Mut. Casualty Ins. Co. v. Parker, 282 S.C. 546, 550-51, 320 S.E.2d 458, 461 (Ct.App.1984) (citations omitted). "Reasonable exclusionary clauses which do not conflict with the legislative expression of the public policy of the State as revealed in the various motor vehicle insurance statutes are permitted." Id. at 551, 320 S.E.2d at 461. "Where a statute requires insurance for the benefit of the public, however, the insurer is not permitted to nullify its purposes through engrafting exceptions from liability as to uses which it was the evident purpose of the statute to cover." Id.

The Motor Vehicle Financial Responsibility Act requires, in part, that a "motor vehicle liability policy" fulfill the requirements of S.C.Code Ann. § 38-77-140 (1989 & Supp.1999) (Liability coverage for damages arising out of ownership, maintenance or use must be issued, subject to limits of: "fifteen thousand dollars because of bodily injury to one person in any one accident and, subject to the limit for one person, thirty thousand dollars because of bodily injury to two or more in any one accident...."). The Act further subjects every motor vehicle liability policy to the following provisions:

(1) The liability of the insurance carrier with respect to the insurance required by this chapter shall become absolute whenever injury or damage covered by the motor vehicle liability policy occurs;

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340 S.C. 227

(3) No statement made by the insured or on his behalf and no violation of the policy shall defeat

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