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South Carolina Electric and Gas Co. v. Old Republic Insurance Co.

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

April 14, 2017

South Carolina Electric and Gas Company, Plaintiff,
v.
Old Republic Insurance Company, Emerson Electric Company, and Emerson Process Management Power and Water Solutions, Inc., Defendants.

          ORDER AND OPINION

          RICHARD MARK GERGEL UNITED STATE DISTRICT COURT JUDGE.

         Plaintiff South Carolina Electric and Gas Company ("SCE&G") filed this lawsuit in July 2016 seeking a declaration that Old Republic Insurance Company ("Old Republic") has a duty to defend and possibly indemnify SCE&G in connection with two underlying personal injury lawsuits. This matter is before the Court on SCE&G's motion for partial summary judgment (Dkt. No. 28) on its claims for a declaration that Old Republic has breached its duty to defend SCE&G, that Old Republic should fully reimburse SCE&G for its prior defense costs, and that Old Republic should pay for SCE&G's defenses in the underlying cases moving forward. For the reasons set forth below, SCE&G's motion for summary judgment is denied.

         I. Background

         The following facts are not in dispute. SCE&G owns and operates an electric plant in Canadys, South Carolina (the "Canadys Plant"). On or around September 17, 2008, SCE&G entered into a Master Agreement with Emerson Process Management Power and Water Solutions, Inc. ("Emerson Process") under which Emerson Process agreed to update the turbine control systems at the Canadys Plant. (Dkt. No. 1-1 at 11-22.) That Master Agreement included a clause which required Emerson Process to "list SCE&G and its subsidiaries as an additional insured subject to the limitations and restrictions set forth in Section entitled 'Limitation of Liability, ' and cover only third-party claims to the extent of the negligent acts or omissions of Emerson" ((Id. at 21) (emphasis added).) Defendant Old Republic issued a Commercial General Liability Policy (the "Policy") to Emerson Electric Company ("Emerson") and its subsidiaries[1] for two million dollars ($2, 000, 000). (Dkt. No. 32-1.) The Certificate of Insurance indicates that Emerson named SCE&G as an additional insured under the Policy subject to the following limitations: "The Certificate Holder [SCE&G] is included as an Additional Insured on the General Liability but only in respect to their interest in the operations of the Named Insured [Emerson] and only for such terms and limits which are the lesser of the policies hereon or the written requirements between the Named Insured and Certificate Holder." (Id. at 2.) The parties agree that, under Certificate of Insurance and Master Agreement, SCE&G only qualifies as an additional insured "to the extent of the negligent acts or omissions of Emerson."

         On September 28, 2011, Mr. Samuel Washington was performing electrical work for Emerson at the Canadys Plant when he came into contact with live wires and was injured from an electrical shock.[2] Mr. Washington filed a tort action against Emerson, SCE&G, and others in the Colleton County Court of Common Pleas, and his wife filed a companion case for loss of consortium[3] (together, the "underlying cases"). The complaints allege negligence, negligent supervision, and/or negligent training on behalf of SCE&G, Emerson, and others. (Dkt. No. 28-1.) Notably, the complaints make identical allegations against both Emerson and SCE&G, and the allegations against SCE&G are direct - they do not rely on any theory of vicarious liability. On March 7, 2017, SCE&G learned that Emerson had settled with the Washingtons in the underlying cases which are both scheduled for trial in April 2017.

         SCE&G claims that by March 1, 2017, it had incurred expenses over $90, 000 defending the Washington cases. (Dkt. No. 28 at 6.) SCE&G has moved for summary judgment, asking this Court to find that Old Republic breached its contractual duty to defend SCE&G as an additional insured in the underlying cases and is responsible for reimbursing SCE&G for its prior defense costs and for paying SCE&G's defense costs for the underlying cases going forward.

         II. Legal Standard

         A. Summary Judgment

         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)).

         B. Insurance Policies

         This Court has diversity jurisdiction under 28 U.S.C. § 1332. In diversity cases, federal courts apply the choice of law rules of the states in which they are located. See Klaxton Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941). Under South Carolina law, insurance policies are subject to the general rules of contract construction. B.L.G. Enters., Inc. v. First Fin. Ins. Co., 514 S.E.2d 327, 330 (S.C. 1999). "When a contract is unambiguous, clear, and explicit, it must be construed according to the terms the parties have used." Id. The court must enforce, not write, contracts of insurance and must give policy language its plain, ordinary, and popular meaning. Id.

         C. Duty to Defend and Indemnify

         In South Carolina, the duty to defend is separate from the duty to indemnify. American Casualty Co. v. Howard, 187 F.2d 322, 327 (4th Cir.1951). "Although these duties are related in the sense that the duty to defend depends on an initial or apparent potential liability to satisfy the judgment, the duty to defend exists regardless of the insurer's ultimate liability to the insured. . . Indemnity contemplates merely the payment of money. The agreement to defend contemplates the rendering of services." Sloan Constr. Co. v. Central Nat'l Ins. Co. of Omaha,236 S.E.2d 818, 820 (1977) (citations omitted). South Carolina courts look to the allegations in the complaint to determine the scope of an insurance company's duty to defend a claim brought against its insured. CD. Walters Constr. Co. v. Fireman's Ins. Co. of Newark, N.J.,316 S.E.2d 709 (S.C. Ct. App. 1984). If the underlying complaint creates a possibility of coverage under an insurance policy, the insurer is ...


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