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Founders Insurance Co. v. Richard Ruth's Bar & Grill LLC

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

June 8, 2016




         This matter comes before the court on declaratory judment action (2:13-cv-3035) plaintiff Founders Insurance Company’s ("Founders") motion for summary judgment as to bad faith action plaintiff and declaratory judgment action defendant George Giannaras, as guardian for Emmanuel Kehagias’s ("Kehagias") counterclaims, ECF No. 164. For the reasons set forth below, the court grants Founders’s motion.

         I. BACKGROUND [1]

         This motion involves Founders’s declaratory judgment action against Kehagias, Richard Ruth’s Bar and Grill LLC ("Richard’s Bar"), Richard Ruth ("Mr. Ruth"), and Jane Ruth ("Ms. Ruth") (collectively "the Ruths") seeking a declaration that Founders has no duty to indemnify the Ruths for claims asserted by Kehagias for a judgment in the underlying personal injury action in state court. ECF No. 113, Am. Compl. Kehagias filed an answer and renewed counterclaims on April 22, 2015, asserting two counterclaims against Founders for negligent misrepresentation of the applicable policy limits and negligence/gross negligence pertaining to Founders’s alleged failure to pay the medical payment limits ("Med-Pay"). ECF No. 116.

         Founders filed the present motion for summary judgment on October 14, 2015. ECF No. 164. Kehagias filed a response on November 12, 2015. The motion has been fully briefed and is now ripe for the court’s review.

         II. STANDARD

         Summary judgment shall be granted "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). "By its very terms, this standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Id. at 248. "[S]ummary judgment will not lie if the dispute about a material fact is ‘genuine, ’ that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id.

         "[A]t the summary judgment stage the judge’s function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Id. at 249. When the party moving for summary judgment does not bear the ultimate burden of persuasion at trial, it may discharge its burden by demonstrating to the court that there is an absence of evidence to support the non-moving party’s case. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). The non-movant must then "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." Id. at 322. The court should view the evidence in the light most favorable to the non-moving party and draw all inferences in its favor. Anderson, 477 U.S. at 255.


         Founders argues that Kehagias’s negligent misrepresentation counterclaim fails because he cannot establish detrimental reliance or damages regarding Founders’s misrepresentations. ECF No. 164, at 11. Founders further argues that the negligence/gross negligence counterclaim also fails because Kehagias cannot establish that Founders breached any duty or that he was damaged as a result of the alleged breach. Id. at 12-14.

         A. Negligent Misrepresentation

         In his negligent misrepresentation claim, Kehagias alleges that Founders and its agent misrepresented the applicable policy limits on September 3, 2013 in its counteroffer because it stated that the maximum coverage was $50, 000.

         South Carolina law prohibits an insurer from knowingly misrepresenting to third-party claimants "pertinent facts or policy provisions relating to coverages at issue or providing deceptive or misleading information with respect to coverages." S.C. Code Ann. § 38-59-20 (1976). Under South Carolina law, in order to maintain an action for negligent misrepresentation for a pecuniary loss, Kehagias must establish the following six elements: (1) that Founders made a false representation to the plaintiff; (2) that Founders had a pecuniary interest in making the statement; (3) that Founders owed a duty of care to see that it communicated truthful information to the plaintiff; (4) that Founders breached that duty by failing to exercise due care; (5) that Kehagias justifiably relied on the representation; and (6) that Kehagias suffered a pecuniary loss as a proximate result of his reliance upon the representation. Spires v. Acceleration Nat. Ins. Co., 417 F.Supp.2d 750, 754 (D.S.C. 2006) (citing AMA Mgmt. Corp. v. Strasburger, 420 S.E.2d 868 (S.C. 1992)).

         Founders first argues that Kehagias cannot recover under its negligent misrepresentation counterclaim as a matter of law because Founders provided a full copy of their insurance policy. ECF No. 164, 11. Founders further argues that Kehagias cannot establish detrimental reliance because: (1) he did not accept the $50, 000 offer; (2) Giannaras testified that he would not have accepted an offer of $105, 000, ...

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