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State Farm Fire & Casualty Co. v. Admiral Insurance Co.

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

January 25, 2017

State Farm Fire and Casualty Company and Maurice Lavon Robinson, Plaintiffs,
v.
Admiral Insurance Company, Defendant.

          ORDER AND OPINION

          Richard Mark Gregel United States District Court Judge

         This matter is before the Court on Defendant Admiral Insurance Company's motion for summary judgment (Dkt. No. 50) and Plaintiff State Farm Fire and Casualty Company's motion for summary judgment (Dkt. No, 52). For the reasons set forth below, the Court grants Admiral's motion for summary judgment and denies State Farm's motion for summary judgment.

         I. Background

         Plaintiff State Farm, which provided homeowner's liability coverage to Plaintiff Maurice Robinson, alleges Defendant Admiral had a duty to defend and to indemnify Mr. Robinson in an underlying tort action arising from fraternity hazing that Mr. Robinson hosted at his home. On October 22-23, 2011, Daniel McElveen was a pledge for the Pi Chi Chapter (Francis Marion Chapter) of Phi Beta Sigma Fraternity International, Inc.[1] That evening, Daniel McElveen and two other pledges went to the home of Mr. Robinson, vice president of the local alumni chapter of the fraternity, in Florence, South Carolina, where fraternity members gathered. At Mr. Robinson's home, Mr. McElveen and the two other pledges were subjected to several forms of hazing including paddling that caused Mr. McElveen to suffer kidney damage and renal failure. He ultimately made a full recovery. Mr. Robinson denies that he paddled Mr. McElveen, but he otherwise admits that he participated in the hazing hosted at his home that night. (See Dkt. No. 55-1 at 6-8.) Mr. McElveen testified at trial that Mr. Robinson was "in charge" of the hazing. (Dkt. No. 50-4.)

         On January 15, 2013, Mr. McElveen filed suit in the South Carolina Court of Common Pleas, Florence County against Phi Beta Sigma, Pi Chi, Jimmy Hammock (Pi Chi Chapter president), Francis Marion University, and Mr. Robinson. State Farm defended Mr. Robinson under his homeowner's policy, which had a $300, 000 limit. Admiral defended Phi Beta Sigma, Pi Chi, and Mr. Hammock under a general commercial liability policy, number CA000002580-08, which had limits of $1 million per occurrence and $2 million in aggregate. (Dkt. No. 50-3.) Mr. Robinson tendered his defense to Admiral, but Admiral declined to accept it. The Admiral policy contained a hazing exclusion for bodily injury arising out of hazing, applicable to covered persons who participate in or direct others to participate in hazing. (Id.)

         Admiral settled claims against Phi Beta Sigma, Pi Chi, and Mr. Hammock for $500, 000. State Farm offered a $50, 000 settlement, refused a $300, 000 settlement offer, and the case proceeded to trial solely against Mr. Robinson. (See Dkt. No. 44 at 9 (referring to Bates State Farm 965).) State Farm provided a letter dated March 28, 2014 to Mr. Robinson assuring him that it would pay any excess verdict. (Id.) On April 3, 2014, [2] the jury awarded Mr. McElveen a judgment against Robinson of $600, 000 actual damages and $1, 000, 000 punitive damages. The jury attributed 99% fault against Mr. Robinson and 1% against Mr. McElveen. The jury also found that Maurice Robinson's actions or omissions on October 22-23, 2011 were in furtherance of a Phi Beta Sigma initiation ritual required for membership.

         After the trial, State Farm settled with Mr. McElveen for $975, 000. On July 10, 2015, State Farm filed the present action, seeking indemnity, damages, and declaratory relief.

         II. Legal Standard

         Summary judgment is appropriate if a party "shows 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(a). In other words, summary judgment should be granted "only when it is clear that there is no dispute concerning either the facts of the controversy or the inferences to be drawn from those facts." Pulliam Inv. Co. v. Cameo Props., 810 F.2d 1282, 1286 (4th Cir. 1987). "In determining whether a genuine issue has been raised, the court must construe all inferences and ambiguities in favor of then on moving party." HealthSouth Rehab. Hosp. v. Am. Nat'l Red Cross, 101 F.3d 1005, 1008 (4th Cir. 1996). The party seeking summary judgment shoulders the initial burden of demonstrating to the court that there is no genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).

         Once the moving party has made this threshold demonstration, the non-moving party, to survive the motion for summary judgment, may not rest on the allegations averred in his pleadings. Id. at 324. Rather, the non-moving party must demonstrate that specific, material facts exist that give rise to a genuine issue. Id. Under this standard, "[c]onclusory or speculative allegations do not suffice, nor does a 'mere scintilla of evidence'" in support of the non-moving party's case. Thompson v. Potomac Elec. Power Co., 312 F.3d 645, 649 (4th Cir. 2002) (quoting Phillips v. CSX Transp., Inc., 190 F.3d 285, 287 (4th Cir. 1999)).

         III. Discussion

         State Farm asserts Mr. Robinson was an insured under the Admiral policy as a volunteer worker with Phi Beta Sigma, and that Admiral therefore had a duty to defend him in the underlying tort action and to indemnify him. (Dkt. No. 52-1.) Admiral responds that Mr. Robinson was not an insured under the policy because he was not a volunteer worker for Phi Beta Sigma as that term is defined under the policy (at least with regard to the night of October 22-23, 2011), and that even if he were an insured, the claims against him fell under the policy's exclusion for violation of membership intake process and the policy's exclusion for bodily injury arising from hazing. Admiral seeks summary judgment for those same reasons.

         The Court does not reach whether Mr. Robinson was an insured under the policy or whether his conduct fell under the policy's exclusion for violation of membership intake process. Even if Mr. Robinson were an insured under the policy issued by Admiral, Mr. McEIveen's claims against him plainly fall under the policy's hazing exclusion. That exclusion provides,

It is agreed this insurance does not apply to "bodily injury", "property damage" or "personal and advertising injury" arising out of hazing, sexual abuse, physical abuse or molestation committed ...

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