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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

FOUNDERS INSURANCE COMPANY, Plaintiff,
v.
RICHARD RUTH’S BAR & GRILL LLC, RICHARD RUTH, SR., JANE RUTH, and GEORGE GIANNARIS, as guardian for EMMANUEL KEHAGIAS, Defendants. RICHARD RUTH’S BAR & GRILL LLC, RICHARD RUTH, SR., and JANE RUTH, and GEORGE GIANNARIS, as guardian for EMMANUEL KEHAGIAS, Plaintiffs,
v.
FOUNDERS INSURANCE COMPANY, BROWN & BROWN, INC., HULL & COMPANY, INC., and UTICA MUTUAL INSURANCE COMPANY, Defendants.

          ORDER

          DAVID C. NORTON UNITED STATES DISTRICT JUDGE

         This matter comes before the court on bad faith action (2:14-cv-03272) defendants Brown & Brown, Inc. ("Brown") and Hull & Company, Inc’s ("Hull") motion for summary judgment. ECF No. 158. For the reasons set forth below, the court grants Brown’s motion for summary judgment. The court further grants Hull’s motion for summary judgment.

         I. BACKGROUND[1]

         The court will dispense with a lengthy recitation of the underlying facts and mention only those facts that are pertinent to this specific motion. On September 29, 2012, a patron of Richard Ruth’s Bar and Grill, LLC struck Emmanuel Kehagias ("Kehagias") during a pool game, and Kehagias suffered severe injuries and permanent brain damage as a result. George Giannaras was appointed to serve as Kehagias’s guardian (collectively "Kehagias"). This motion relates to a consolidated matter involving two separate but related actions regarding Founders Insurance Company’s ("Founders") coverage obligations with respect to Kehagias’s injuries under a general liability policy (the "Policy") purchased by Richard Ruth, Jane Ruth, and Richard Ruth’s Bar and Grill, LLC (the "Ruths"). The first is a declaratory judgment action, 2:13-cv-3035, in which plaintiff Founders requests that the court declare that it is not required to provide coverage under the Policy because the Ruths failed to provide timely notice of the underlying personal injury lawsuit, resulting in substantial prejudice. The second action is a bad faith action, 2:14-cv-3272, filed by the Ruths and Kehagias, alleging that Founders, Hull, [2] Brown, and Utica Mutual Insurance Company ("Utica"), [3] failed to properly handle the underlying personal injury claim. The Ruths assigned their rights in the bad faith action to Kehagias pursuant to an Assignment dated May 28, 2014.

         The Ruths have used Cherie Dumez ("Dumez") of the Cherie Dumez Agency as their insurance agent for approximately ten years. Dumez Dep. 20:15-21:12. To obtain the Policy, the Ruths completed an application for insurance and Dumez submitted the application to Hull, an insurance broker and wholesaler, to obtain quotes from different insurers. Dumez Dep. 19:3-11, 70:5-16. Dumez determined that Founders offered the best quote. Id. Hull is a subsidiary of Brown. Hull operates pursuant to producer agreements with various insurers, including Founders. The Founders producer agreement provides:

PRODUCER [Hull] agrees that the services performed by it pursuant to this agreement shall be performed as an independent contractor and not as the agent of employee of COMPANY [Founders].

ECF No. 166 Ex. A.

         On November 12, 2012, the Anastopoulo Law Firm sent the Ruths a letter notifying them that Kehagias had retained the firm to represent him in connection with the injuries he sustained at the bar. Ms. Ruth faxed the letter to Dumez. Ms. Ruth Depo. 41:7-20. Dumez forwarded the letter to Melanie Yount ("Yount") at Hull on November 27, 2012. Dumez Dep. 39:9-40:9, ECF No. 157 Ex. 18. Kehagias alleges that Hull failed to forward the letter to Founders or forwarded the letter in a in a manner that appeared to be connected to a separate claim. Dumez, Hull, and Founders exchanged a series of emails on January 9, 2013. That same day, Dumez sent the letter from the Anastopoulo Law Firm a second time. ECF No. 157 Ex. 19. Yount responded to the email and stated: "Please see attached from the company. It appears that they are not going o [sic] defend the insured per the exclusions in the policy. Please advise of any questions or I [sic] can do anything else." ECF No. 180 Ex. 10. Dumez responded: "Thanks for this….but there is yet…another one for an assault and battery claim that happened in 2012. That is the biggie we are worried about." Id. Dumez’s hand-written notes on the email state that "Melanie sent [Dumez] info on wrong claim." Id.

         Hull and Brown (collectively "Hull") filed the present motion on October 14, 2015. ECF No. 158. Kehagias filed a response in opposition on November 12, 2015. ECF No. 179. 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.

         III. DISCUSSION

         Hull argues that the court should grant its motion for summary judgment because: (1) the Ruths did not assign Kehagias any claims they may have had against Brown; (2) there is no evidence that Hull or Brown owed the Ruths a duty; (3) the Ruths failed to mitigate their damages; (4) the Ruths were comparatively negligent; and (5) neither Brown nor Hull had a duty to exercise good faith ...


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