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Colter v. Omni Insurance Co.

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

January 6, 2017

Allison Colter, on behalf of herself and all others similarly situated, Plaintiff,
v.
Omni Insurance Company and Omni Indemnity Company, Defendants.

          ORDER AND OPINION

         Plaintiff Allison Colter (“Plaintiff”), on behalf of herself and all others similarly situated, filed the instant putative class action seeking damages from Defendants Omni Insurance Company and Omni Indemnity Company (together “Omni” or “Defendants”) for their alleged imposition of an illegal and unauthorized “betterment” or depreciation charge on property settlements for accidents. (ECF No. 1-1.)

         This matter is before the court on Plaintiff's Motion to Alter or Amend Judgment pursuant to Rule 59(e) of the Federal Rules of Civil Procedure (ECF No. 74). Specifically, Plaintiff seeks reconsideration of the Order entered on July 12, 2016 (the “July Order”), in which the court granted Defendants' Motion to Dismiss the Complaint (ECF No. 17) after determining that each cause of action raised by Plaintiff was based on the incorrect assertion that a ‘betterment' charge is illegal in South Carolina. (ECF No. 69 at 6.) Defendants oppose Plaintiff's Motion to Alter or Amend asserting that it should be denied and the court “should consider sanctions against Plaintiff and/or her counsel.” (ECF No. 78 at 29.)

         For the reasons set forth below, the court DENIES Plaintiff's Motion to Alter or Amend.

         I. RELEVANT BACKGROUND TO PENDING MOTIONS

         Defendants are automobile insurers for Kayla McDaniels (the “Insured”). (ECF No. 1-1 at 3 ¶ 5.) On February 17, 2015, Plaintiff was involved in a motor vehicle accident with Defendants' Insured. (Id.) After determining that their Insured was liable for the damage to Plaintiff's vehicle, Defendants told Plaintiff that she would receive payment for her damages equal to her repair estimate minus a betterment or depreciation charge for certain damaged parts. (Id. at ¶ 6.) Specifically, Defendants deducted a betterment charge of $313.87 from the total repair bill of $4, 291.80 to account for depreciation in the muffler. (Id. at 9.)

         Because she believes the betterment charge is illegal and not allowed under South Carolina law, Plaintiff filed an action in the Richland County (South Carolina) Court of Common Pleas on September 18, 2015, asserting causes of action against Defendants for breach of contract, fraud, violation of the South Carolina Unfair Trade Practices Act (“SCUTPA”), SC Code Ann. §§ 39-5-10 to -560 (2014), negligent misrepresentation, and negligence. (ECF No. 1-1 at 4-7.) On October 8, 2015, Defendants removed the matter to this court on the basis of diversity jurisdiction pursuant to 28 U.S.C. § 1332. (ECF No. 1.) After removing the matter, Defendants filed their Motion to Dismiss on December 4, 2015. (ECF No. 17.) Plaintiff filed opposition to Defendants' Motion to Dismiss on December 21, 2015. (ECF No. 25.) After the court entered the July Order, Plaintiff moved to alter or amend on August 24, 2016.[1] (ECF No. 74.)

         II. JURISDICTION

         The court has jurisdiction over this matter pursuant to 28 U.S.C. § 1332(a)(1) based on Defendants' allegations that there is complete diversity of citizenship between Plaintiff and Defendants, and the amount in controversy herein exceeds the sum of Seventy-Five Thousand ($75, 000.00) Dollars, exclusive of interest and costs. (See ECF No. 1 at 2 ¶¶ 4-5.)

         III. LEGAL STANDARD AND ANALYSIS

         In the July Order, the court made the following observations in granting Defendants' Motion to Dismiss (ECF No. 17) Plaintiff's Complaint:

The premise of Defendants' Motion to Dismiss is that all of Plaintiff's claims fail since a betterment charge is not illegal under South Carolina law. Plaintiff opposes the Motion to Dismiss on the grounds that a betterment charge is illegal because South Carolina common law has defined the measure of damage to a vehicle in terms that do not contemplate a betterment charge. More specifically, Plaintiff's position is that betterment is illegal in South Carolina based on the definition of damages provided by Hutson and Newman. For a betterment charge to be illegal in South Carolina, it must be “unlawful” or “not authorized by law.” Black's Law Dictionary Online, http://thelawdictionary.org/illegal/ (last visited July 8, 2016). After failing to locate any South Carolina statutory law or common law expressly addressing the legality of a betterment charge, the court finds that neither Hutson, Newman, nor any other decisions by the appellate courts of South Carolina define the measure of damages in South Carolina in such a way that would make the imposition of a betterment charge by Defendants illegal in this state. A brief discussion of the relevant case law informs the issue.
“The general rule is that the owner of personal property, injured by the negligence of another, is entitled to recover the difference between the market value of the property immediately before the injury and its market value immediately after the injury.” Coleman v. Levkoff, 122 S.E. 875, 876 (S.C. 1924) (citations omitted). “If . . . the owner has the property repaired and restored to a condition in which its market value equals or exceeds the market value before the injury, the measure of damages in that case is the reasonable cost of restoring the property to its previous condition, together with the value of the use of the property during the time reasonably required to repair it.” Id. In Newman, “diminution in value” was added to the “proper measure of damages.” 90 S.E.2d at 652. A few years after Newman, the South Carolina Supreme Court decided that a “deductible specified in the [insurance] policy” could be part of the damages calculation. Campbell v. Calvert Fire Ins. Co., 109 S.E.2d 572, 577 (S.C. 1959). Thereafter, in Hutson, the South Carolina Court of Appeals observed that the value of loss of use and either the cost of repair or the depreciation in a vehicle's value may constitute the measure of damages recoverable from the tortfeasor (not the tortfeasor's insurer). 314 S.E.2d at 23 (citing Newman, Coleman). In addition, the Hutson court speculated that lost profits could be part of the measure of damages. Id. (citing Charles v. Tex. Co., 18 S.E.2d 719 (S.C. 1942)).
After considering the aforementioned case law, the court concludes that it is unable to infer the illegality of a betterment charge in South Carolina since the measure of damages is not just the cost of repair, plus the value of the loss of use as Plaintiff asserts. In reaching this conclusion, the court finds support for the propriety of a betterment charge from observations made by other jurisdictions. See, e.g., Pizani v. M/V Cotton Blossom, 737 F.2d 1334, 1337 (5th Cir. 1984) (“An increase in value effected by the repair or replacement of a damaged item is properly deducted from the plaintiff's recovery for the cost of repairs.”) (citation omitted); Delta Towing LLC v. Basic Energy Servs., C/A No. 6:08CV0075, 2011 WL 102717, at *6 (W.D. La. Jan. 12, 2010) (“But where the market value of the property is known, and the repairs necessary to correct the damage enhance the pretort value of the property (a concept referred to as “betterment”), the increase in value is typically deducted from the plaintiff's recovery for the cost of repairs.”); Patterson Terminals, Inc. v. S.S. Johannes Frans, 209 F.Supp. 705, 710 (E.D. Pa. 1962) (“It violates reason to find that a responsible party should be obligated to replace in a new condition that which was deteriorated prior to the time he became responsible. If some of the repairs are required because of age, ...

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