United States District Court, D. South Carolina, Charleston Division
ORDER AND OPINION
RICHARD MARK GERGEL UNITED STATE DISTRICT COURT JUDGE.
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
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 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
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. 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 (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.
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.
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).
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)).
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.
Duty to Defend and Indemnify
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 ...