United States District Court, D. South Carolina, Florence Division
Bryan Harwell United States District Judge
Casey Lynn Jordan filed this first-party insurance bad faith
action against her insurer Defendant Allstate Insurance
Company. The matter is before the Court for resolution of
three pending motions: a motion for a protective order filed
by Plaintiff, a motion in limine to exclude evidence filed by
Plaintiff, and a motion for summary judgment filed by
Allstate. The Court held a hearing on May 27, 2016, and took
all motions under advisement. For the reasons explained
below, the Court grants Allstate’s motion for summary
judgment, dismisses this case with prejudice, and denies
Plaintiff’s motions as moot.
judgment is appropriate when no genuine issue of material
fact exists and the moving party is entitled to judgment as a
matter of law. Reyazuddin v. Montgomery Cty., Md.,
789 F.3d 407, 413 (4th Cir. 2015); see Fed. R. Civ.
P. 56(a) (“The court shall grant summary judgment if
the movant shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a
matter of law.”). “A party asserting that a fact
cannot be or is genuinely disputed must support the assertion
by: (A) citing to particular parts of materials in the record
. . .; or (B) showing that the materials cited do not
establish the absence or presence of a genuine dispute, or
that an adverse party cannot produce admissible evidence to
support the fact.” Fed.R.Civ.P. 56(c)(1). The facts and
inferences to be drawn from the evidence must be viewed in
the light most favorable to the non-moving party,
Reyazuddin, 789 F.3d at 413, but the Court
“cannot weigh the evidence or make credibility
determinations.” Jacobs v. N.C. Admin. Office of
the Courts, 780 F.3d 562, 569 (4th Cir. 2015).
“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). “A dispute of
material fact is ‘genuine’ if sufficient evidence
favoring the non-moving party exists for the trier of fact to
return a verdict for that party.” Seastrunk v.
United States, 25 F.Supp.3d 812, 814 (D.S.C. 2014). A
fact is “material” if proof of its existence or
nonexistence would affect disposition of the case under the
applicable law. Anderson, 477 U.S. at 248.
summary judgment stage, “the moving party must
demonstrate the absence of a genuine issue of material fact.
Once the moving party has met his burden, the nonmoving party
must come forward with some evidence beyond the mere
allegations contained in the pleadings to show that there is
a genuine issue for trial.” Baber v. Hosp. Corp. of
Am., 977 F.2d 872, 874-75 (4th Cir. 1992) (internal
citation omitted). Summary judgment is not warranted unless,
“from the totality of the evidence, including
pleadings, depositions, answers to interrogatories, and
affidavits, the [C]ourt believes no genuine issue of material
fact exists for trial and the moving party is entitled to
judgment as a matter of law.” Whiteman v.
Chesapeake Appalachia, L.L.C., 729 F.3d 381, 385 (4th
Cir. 2013); see also Celotex Corp. v. Catrett, 477
U.S. 317, 322-23 (1986).
4, 2010, Plaintiff suffered a left shoulder injury in an
automobile accident when her car was struck by a vehicle
operated by Carlos Vincent Chinn, the at-fault
driver. See Complaint, ECF No. 1-1, at
¶¶ 4-9. At the time of the accident, Chinn
maintained an insurance policy through United Auto Insurance
Company with $25, 000 in liability coverage, and Plaintiff
maintained an insurance policy through Allstate with a total
of $50, 000 in underinsured motorist (UIM) coverage.
Id. at ¶¶ 10-11.
2013, Plaintiff filed the underlying tort action in state
court and served Allstate with a copy of the pleadings.
Id. at ¶ 12. In December 2013, United tendered
the $25, 000 liability limits in exchange for a covenant not
to execute. Id. at ¶ 14. Pursuant to section
38-77-160 of the South Carolina Code,  Plaintiff
continued in the underlying action to recover UIM benefits
claiming her damages exceeded $25, 000, and Allstate assumed
control of the defense of the action. Id. at
January 3, 2014, Plaintiff sent Allstate written
correspondence demanding that it settle her claim by
tendering the entire $50, 000 in UIM coverage. Id.
at ¶ 16. This correspondence (1) noted the case was one
of clear liability and that Plaintiff had suffered special
damages totaling $33, 457.38 ($29, 785.38 in medical bills
and $3, 672 in lost wages); (2) required that Allstate notify
Plaintiff in writing if it refused her demand; (3) notified
Allstate that it owed Plaintiff duties of good faith and fair
dealing, and that if Allstate refused her demand, she
required documentation of its internal evaluation of her
claim; and (4) requested a response to her demand by January
17, 2014. Id. at ¶¶ 16-18.
January 15, 2014, Allstate’s attorney contacted
Plaintiff and asked if Allstate could proceed with the
deposition of Dr. Earl B. McFadden (Plaintiff’s
orthopaedic surgeon) before having to respond to
Plaintiff’s settlement demand. Id. at ¶
19. Plaintiff consented to this request. Id. On
February 27, 2014, Allstate took Dr. McFadden’s
deposition and asked him about Plaintiff’s alleged
shoulder injury. Id. at ¶ 21. During the
deposition, an issue arose regarding whether the shoulder
injury resulted from the accident, so Dr. McFadden asked the
parties to obtain the MRI of Plaintiff’s left shoulder
that had been taken shortly after the accident. Id.
at ¶ 21.
obtained the MRI and provided it to Dr. McFadden, who then
provided a written opinion stating the accident had
proximately caused Plaintiff’s shoulder injury.
Id. at ¶ 23. On April 1, 2014, in light of Dr.
McFadden’s opinion, Plaintiff sent Allstate
correspondence renewing all previous demands from her January
3 correspondence and noting her settlement demand ($50, 000)
“was slightly more than 2.5 times the specials in the
case, a very reasonable figure given that the specific facts
of her case . . . made for a strong punitive damages
argument.” Id. at ¶ 24. The April 1
correspondence noted mediation was upcoming and demanded that
Allstate tender the full UIM benefits no later than April 15,
April 11, 2014, Allstate sent Plaintiff an email stating its
“‘adjuster ha[d] been out of the
office’” and requesting a ten-day extension to
respond to the April 1 demand. Id. at ¶ 25.
Plaintiff consented to the extension. Id.
April 23, 2014, Allstate sent Plaintiff an email responding
to her April 1 demand and offering $15, 000 of UIM benefits.
Id. at ¶ 26. On April 25, 2014, Plaintiff
refused Allstate’s offer via written correspondence,
noting the $15, 000 offer indicated Allstate valued
Plaintiff’s total claim as being worth $40, 000 (the
$25, 000 credit Allstate would receive from Chinn’s
liability coverage plus Allstate’s $15, 000 offer of
UIM benefits). Id. at ¶ 27. Plaintiff pointed
out that she had provided Allstate documentation supporting
her special damages of $33, 457.38 and that those damages did
not factor in her pain and suffering, stress and anxiety,
other non-liquidated damages, and the punitive damages to
which she was very likely entitled. Id. Plaintiff
accused Allstate of offering significantly below its true
evaluation of her claim and put Allstate on notice that its
refusal to make a good faith offer would now result in
prejudice to Plaintiff, who would have to incur the cost of
mediation and preparation for trial (including depositions of
Dr. McFadden and an eyewitness). Id. at ¶¶
13, 2014, the parties mediated the case. ECF No. 53-3. The
parties reached an impasse at mediation when Allstate’s
final offer of UIM coverage was $23, 000 and
Plaintiff’s “bottom line” demand was $45,
000 of the available $50, 000 in UIM coverage. Id.
Thereafter, the case proceeded to trial in May 2014 and the
jury awarded Plaintiff total damages of $62, 500 ($55, 000 in
actual damages plus $7, 500 in punitive damages). Compl. at
¶¶ 29. Allstate promptly paid Plaintiff the amount
owed in UIM benefits-$37, 500 (the amount of UIM benefits due
after Chinn’s tendered limits of $25, 000 were
subtracted from the $62, 500 verdict). ECF No. 53-1 at 3.
Therefore, the verdict did not
exhaust the UIM coverage.
2014, Plaintiff filed the current lawsuit in state court,
alleging six causes of action: (1) breach of contract, (2)
bad faith refusal to pay benefits, (3) bad faith in
handling/adjusting a claim for insurance benefits, (4)
negligent misrepresentation, (5) fraudulent
misrepresentation, and (6) violation of the South Carolina
Unfair Trade Practices Act. Compl. at ¶¶ 31-67. In
July 2014, Allstate removed the action to this Court on the
basis of diversity jurisdiction pursuant to 28 U.S.C. §
1332. ECF No. 1. Plaintiff filed a motion for a protective
order and a related motion in limine to exclude evidence. ECF
No. 45. Allstate filed a motion for summary judgment. ECF No.
53. The Court held a hearing on May 27, 2016, and took all
motions under advisement. ECF Nos. 60 & 62.
Allstate’s Motion for Summary Judgment
has moved for summary judgment as to all six of
Plaintiff’s causes of action. See ECF No.
53-1. At the hearing in this matter, Plaintiff withdrew and
abandoned her claims for negligent misrepresentation,
fraudulent misrepresentation, and unfair trade practices.
See ECF No. 62. Accordingly, she is proceeding
solely on her three remaining causes of action: (1) breach of
contract, (2) bad faith refusal to pay benefits, and (3) bad
faith in handling/adjusting a claim for insurance benefits.
See Compl. at ¶¶ 31-47. The Court first
addresses Plaintiff’s bad faith claims.
South Carolina law, an insurer that unreasonably refuses to
settle a claim with an insured within policy limits is
subject to liability in tort. Nichols v. State Farm Mut.
Auto. Ins. Co., 279 S.C. 336, 339, 306 S.E.2d 616, 618
(1983) (citing Tyger River Pine Co. v. Maryland Cas.
Co., 170 S.C. 286, 170 S.E. 346 (1933)). “[I]f an
insured can demonstrate bad faith or unreasonable action by
the insurer in processing a claim under their mutually
binding insurance contract, he can recover consequential
damages in a tort action.” Id. at 336, 340,
306 S.E.2d at 619. Because a bad faith action lies in tort
and not in contract, a bad faith claim may exist even in the
absence of any violation of an insurance contract provision.
Tadlock Painting Co. v. Maryland Cas. Co., 322 S.C.
498, 503, 473 S.E.2d 52, 55 (1996).
The elements of a cause of action for bad faith refusal to
pay first party benefits under a contract of insurance are:
(1) the existence of a mutually binding contract of insurance
between the plaintiff and the defendant; (2) refusal by the
insurer to pay benefits due under the contract; (3) resulting
from the insurer’s bad faith or unreasonable action in
breach of an implied covenant of good faith and fair dealing
arising on the contract; (4) causing damage to the insured.
Crossley v. State Farm Mut. Auto. Ins. Co., 307 S.C.
354, 359, 415 S.E.2d 393, 396-97 (1992).
present case, it is undisputed that Plaintiff and Allstate
had a mutually binding insurance contract for UIM coverage,
and that Allstate refused to pay Plaintiff the full $50, 000
UIM benefits available under the contract. Thus, the Court
need only consider the final two elements of
Plaintiff’s bad faith claims: (1) whether
Allstate’s refusal to pay the entire $50, 000 in UIM
benefits was the result of bad faith or unreasonable action
on Allstate’s part; and (2) whether Allstate’s
alleged bad faith caused damage to Plaintiff. As the Court
will explain, Plaintiff cannot establish that her damages
were proximately caused by Allstate’s alleged bad
faith, and Allstate is entitled to summary judgment on this
the Court notes Plaintiff’s complaint alleges two
separate causes of action for bad faith, one for “bad
faith refusal to pay benefits” and the other for
“bad faith in handling/adjusting a claim for insurance
benefits.” See Compl. at ¶¶ 36-47.
Plaintiff explains in her response in opposition to
Allstate’s motion for summary judgment that she
“has specifically pled that Allstate handled and
adjusted her claim in bad faith outside of the
payment of any benefits, as evidenced by her complaint
containing a completely separate cause of action for
such conduct.” ECF No. 56 at 5 (italicized emphasis
contends the processing of a claim for benefits
necessarily relates to a refusal to pay benefits,
and that as a matter of law, it did not act in bad faith in
either refusing to pay UIM benefits or processing
Plaintiff’s claim. Allstate cites the elements of a
cause of action for bad faith refusal to pay first party
benefits under a contract of insurance set forth in
Crossley, supra, and Allstate asserts,
“This often-cited precedent makes it crystal clear that
the bad faith ‘handling’ of the claim is but one
element of the cause of action resulting in the
‘refusal by the insurer to pay benefits due under the
contract.’ Plaintiff’s effort to dissect the
‘handling’ aspect of the claim and create some
separate and distinct cause of action based thereon is
contrary to applicable law.” Def.’s Reply, ECF
No. 58 at 3.
Tadlock, the South Carolina Supreme Court quoted its
holding in Nichols “‘that if an insured
can demonstrate bad faith or unreasonable action by the
insurer in processing a claim under their mutually
binding insurance contract, he can recover consequential
damages in a tort action.’” Tadlock, 322
S.C. at 500, 473 S.E.2d at 53 (quoting Nichols, 279