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UFP Eastern Division, Inc. v. Selective Insurance Company of South Carolina

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

February 6, 2017

UFP Eastern Division, Inc., f/k/a Universal Forest Products Eastern Division, Inc., Plaintiff,
Selective Insurance Company of South Carolina, Defendant.


          Richard Mark Gergel United States District Court Judge

         This matter is before the Court on Defendant UFP Eastern Division, Inc.'s motion for summary judgment and Plaintiff Selective Insurance Company of South Carolina's motion for summary judgment. For the reasons set forth below, the Court denies both motions.

         I. Background

         UPF, a Michigan corporation, was a framing contractor to Beazer Homes for the development of 59 single- and multi-story residential buildings in Horry County, South Carolina (the "Park West" project). UFP used several subcontractors on Park West, including VF Builders, which performed the framing scope of work on 13 of the 59 buildings[1] and which was insured by Defendant Selective and two other insurers, Nationwide Mutual and Frankenmuth Mutual. UFP required VF Builders to include UFP as an additional insured on its commercial general liability insurance policy. (Dkt. No. 34-2 § 3.5.)

         After the completion of Park West, the Park West Horizontal Property Regime and Park West Homeowners' Association of Myrtle Beach, Inc. (the "Owners") claimed that damaging water intrusion into the buildings had occurred and that the framing scope of work contributed to that water intrusion. The Owners filed suit against Beazer on January 31, 2013, Beazer in turn filed a third-party complaint against its subcontractors, including UFP, and UFP in turn asserted claims against its subcontractors, including VF Builders (the "Underlying Litigation"). (Dkt. Nos. 34-2 & 34-3.) UFP claims it tendered its defense to Selective on October 1, 2014. (Dkt. Nos. 48 ¶ 12; 72 at 2-3.) Selective denies receiving UFP's tender before April 29, 2015.[2]

         On April 17, 2015, UFP filed the present action in state court against its three insurers. (Dkt. No. 1-1 at 1.) UFP asserts two causes of action. The first cause of action seeks both a declaratory judgment regarding Selective's duty of defense in the underlying litigation and compensatory damages for Selective's alleged breach of that duty of defense. The second cause of action alleges that Selective failed to process UFP's claims in good faith. On June 23, 2015- after the complaint in this action was filed but before it was served-a settlement was reached in the Underlying Litigation.[3] VF Builder's three insurers paid $230, 000 in settlement to UFP; Selective contributed $120, 000 of that amount. (Dkt. No. 72-1 at4.) The settlement was allocated as $41, 089 for construction defects and $188, 911 for attorney's fees. (Id. at 7.) UFP released Frankenmuth from all possible claims, but specifically excluded from the settlement were UFP's claims to insurance benefits, including both defense and indemnification, under commercial general liability policies issued by Selective or Nationwide to VF Builders, and UFP's bad faith claims against Selective or Nationwide. (Id. at 5-7.) Also excluded were the insurers' defenses against those claims. Those excluded issues are the subject matter of the present litigation. The settlement agreement, however, does provide UFP's insurers an offset of $188, 911 in this litigation. (Id. at 7.)

         UFP's action originally named all three insurers-Selective, Nationwide, and Frankenmuth-as Defendants. (Dkt. No. 1-1). Frankenmuth was dismissed on June 29, 2015, shortly after the settlement agreement and before this action was removed from state court. (Dkt. Nos. 1-2 at 1; Dkt. No. 1-3 at 1 (removal on July 16, 2015).) Nationwide was dismissed on February 20, 2016, leaving Selective as the sole Defendant. (Dkt. No. 28.) After the complaint was amended to name the proper Selective legal entity, both parties filed renewed motions for summary judgment, which are now ripe for disposition.

         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). A material fact is one "that might affect the outcome of the suit under the governing law." Spriggs v. Diamond Auto Glass, 242 F.3d 179, 183 (4th Cir. 2001) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). Disputes of material fact are genuine if, based on the evidence, "a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248. 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 the nonmoving party, " HealthSouth Rehab. Hosp. v. Am. Nat 7 Red Cross, 101 F.3d 1005, 1008 (4th Cir, 1996), but it must also "prevent factually unsupported claims and defenses from proceeding to trial, " Drewitt v. Pratt, 999 F.2d 774, 778-79 (4th Cir. 1993) (internal quotation marks omitted).

         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 Tramp., Inc., 190 F.3d 285, 287 (4th Cir. 1999)).

         III. Discussion

         A. Defendant's motion for summary judgment

         Selective presents three arguments in favor of summary judgment: 1) there is no genuine dispute that UFP tendered its defense to Selective on April 29, 2015, and that Selective met its obligation to defend UFP from that date; 2) UFP has failed to present any evidence supporting its claim for indemnity; and 3) UFP cannot present a claim for bad faith because it is not an insured, and if it could, there is no genuine dispute that UFP tendered its defense to Selective on April 29, 2015 and Selective acted in good faith from that date. At trial, UFP will bear the burden of proving its allegations. For summary judgment, Selective, as the movant, bears the burden of ...

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