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Hart v. Safeco Insurance Co.

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

February 14, 2017

Juanita Hart and Devon Hart-Barron, Plaintiffs,
Safeco Insurance Co., a subsidiary of Liberty Mutual Insurance Company; and First National Insurance Company of America, Defendants.


          Richard Mark Gergel United States District Court Judge

         This matter is before the Court on Defendants' motion for partial summary judgment on Plaintiffs' claims for breach of contract and bad faith denial of insurance. For the reasons set forth below, the Court grants the motion, grants summary judgment on Plaintiffs' claim for equitable estoppel, and grants summary judgment on Plaintiffs claims for negligent misrepresentation and promissory estoppel to the extent those causes of action seek damages for Defendants' refusal to provide insurance coverage. Because Plaintiffs' remaining claims are state-law claims that cannot possibly approach the jurisdictional threshold of $75, 000, the Court remands this matter to the Charleston County Court of Common Pleas.

         I. Background

         This is an automobile insurance coverage case. Plaintiffs Juanita Hart and Devon Hart-Barron allege that, in August 2015, Ms. Hart purchased an automobile insurance policy (number F3013258) issued by Defendants from American Auto, an independent insurance agent. (Dkt. No. 54 ¶ 8.) Effective December 31, 2015, Ms. Hart added a2015 Nissan Sentrato the Safeco policy and Plaintiff Devon Hart-Barron as a named insured. (Id. ¶¶ 12-15.) Plaintiffs allege American Auto and Safeco setup a monthly automatic draft payment plan from Ms. Hart's checking account for the insurance premiums. (Id. ¶ 11.) The undisputed facts show Ms, Hart setup a monthly debit card payment, with her premiums charged to a Visa card ending in 7047 and expiring in August 2019. (See Dkt. Nos. 57-1 ¶ 3; 58-1 at 3-4; 58-14.)

         On February 1, 2016, Ms. Hart-Barron was involved in an automobile accident that rendered the 2015 Sentra a total loss. (Dkt. No. 54 ¶¶ 16-17.) Plaintiffs notified Defendant Safeco and American Auto. (Id.) On February 4, 2016, Defendants acknowledged coverage for the accident and offered to pay for the vehicle. (Id. ¶ 19.) That offer was contingent on Plaintiffs executing a power of attorney authorizing Safeco to salvage the vehicle. (Id. ¶ 20.)

         Plaintiffs allege that on February 9, 2016, Ms. Hart called American Auto to ask for instructions regarding transfer of the vehicle to Defendants, she was informed that the January premium payment was not processed and that her policy may be cancelled. (Id. ¶ 22.) It is undisputed that the premium due on January 3, 2016 was not paid. (See Id. ¶ 25.) Plaintiffs allege Defendants never executed the scheduled automatic draft and provided no notice of nonpayment. (Id. ¶¶ 22, 25-26.) Defendants aver that Ms. Hart's card was declined and that timely notice of nonpayment and cancellation were provided. (Dkt. No. 57-1 ¶ 4.)

         Despite the cancellation of coverage, Plaintiffs nonetheless executed the power of attorney and Defendants took possession of the vehicle on February 15, 2016. (Dkt. No. 54 ¶ 23.) After Defendants took possession of the vehicle, Plaintiffs learned the insurance policy had been cancelled because the January 2016 premium payment was not made. (Id. ¶¶ 24, 26.) Plaintiffs further allege that they demanded return of the vehicle but Defendants refused because the vehicle had already been scrapped. (Id. ¶ 26.) Defendants claim the vehicle was in fact returned and Plaintiffs have since conceded the vehicle was returned on July 8, 2016. (See Dkt. Nos. 56 ¶ 19; 58 at 4.)

         On July 5, 2016, Plaintiffs filed the present action in the Charleston County Court of Common Pleas. The case was removed to this court on August 9, 2016. The second amended complaint asserts six causes of action: conversion, breach of contract, bad faith denial of insurance, negligent misrepresentation, promissory estoppel, and equitable estoppel. Defendants move for summary judgment on Plaintiffs' claims of breach of contract and bad faith.

         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 the nonmoving 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. CSXTransp, Inc., 190 F.3d 285, 287 (4th Cir. 1999)).

         III. Discussion

         Defendant moves for partial summary judgment because there is no genuine dispute that Ms. Hart's automobile insurance policy was cancelled for nonpayment of premium due January 3, 2016, after she received proper notice of cancellation. The Court agrees. Plaintiffs produce no evidence suggesting that Defendants failed to present Ms. Hart's January premium to Wells Fargo for payment or failed to provide notice of nonpayment and cancellation in proper form and timely under the insurance contract and under S.C. Code § 38-77-120.

         Plaintiffs' argue Ms. Hart's bank records are evidence suggesting Defendants failed to present ...

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