United States District Court, D. South Carolina, Charleston Division
C. NORTON UNITED STATES DISTRICT JUDGE
following matters are before the court on plaintiff Owners
Insurance Company's (“Owners”) motion to
compel defendant Warren Mechanical LLC (“Warren”)
to pay expert fees, ECF No. 26, Owners's motion for
summary judgment, ECF No. 28, and Warren's motion to
dismiss, or in the alternative, cross-motion for summary
judgment, ECF No. 37. For the following reasons, the court
grants in part and denies in part Owners's motion for
expert fees, denies both parties' motions for summary
judgment, and denies Warren's motion to dismiss.
instant action arises out of an insurance coverage dispute
between Owners and its insured, Warren, regarding certain
alleged misrepresentations in Warren's January 21, 2015
application for workers' compensation insurance. ECF No.
28-3, Application. Warren is a medium-sized construction
company that specializes in the propane and natural gas
industry. ECF No. 28-1, Steve Dep. 12:11- 14. Warren was
founded in 2006 by Steve Warren (“Steve”), who is
its sole owner. In 2014, one of Warren's major customers
required it to obtain an “anti-subrogation
endorsement” in its workers' compensation policy.
ECF No. 37 at 3. Warren contacted its insurance agent, the
Creech Roddy & Watson Insurance Agency
(“CRW”), which informed Warren that it would need
to switch insurers to obtain the required coverage.
Id. Warren's primary contact at CRW, Robert
Nalley (“Nalley”), suggested Owners as a
replacement insurer. Id.
maintains that Steve and Nalley met a few days before CRW
submitted Warren's application for the new policy, but
Nalley forgot to bring the application to the meeting. Steve
Dep. 22:10-24:3. Rather than retrieve the application, Nalley
asked Steve a number of questions and told Steve he would
fill out the application later. Id. Nalley could not
provide Steve with a quote for the policy without first
completing the application, so the pair arranged for
Steve's wife, Raynee Warren (“Raynee”), to
deliver a check for the premium amount on the policy to
CRW's office at a later date. Id. at 35:14-36:1.
did not personally prepare the application. In fact, Nalley
was not even present at the time the application was
completed. Instead, Aura Lewis (“Lewis”), a newly
hired CRW employee, completed the application based on
information provided to her through communications with
Nalley. Lewis Dep. 9:6- 10:23, 34:11-20. A more senior
employee of CRW, Rebecca Hipp (“Hipp”), was also
present when Lewis completed the application. Id. at
36:4-7. It was Hipp who ultimately signed the application on
CRW's behalf. Application at 4.
Raynee arrived at CRW's office to drop off Warren's
premium check, the CRW receptionist instructed her to sign
the application. ECF No. 37-6, Raynee Dep. 11:6-20. Raynee
asked CRW whether it was appropriate for her to sign the
application, and was told that it was, at which point she
signed the application. Id. at 12:20-25. Raynee now
claims that she did not have the authority to sign the
application, and only did so because she was “in
haste” and “didn't think about it.”
Id. at 13:1-6. Indeed, Raynee testifies that she did
not even read the application, and that CRW pressured her to
sign it by telling her that Warren would not be allowed on a
job site unless the application was signed immediately.
Id. at 13:20-14:21.
application stated that:
(1) [Warren's] business operations consisted of
(2) [Warren] had only two full-time employees - one
“Plumbing NOC & Drivers” employee under
National Council on Compensation Insurance
(“NCCI”) classification code 5183 and one
“Clerical Office Employees NOC” employee under
NCCI classification code 8810;
(3) [N]one of [Warren's] work was performed above 15
(4) [Warren's] business did not give rise to “[a]ny
exposure to radioactive materials, flammables, explosives,
caustics, fumes, landfills, asbestos, wastes, fuel tanks,
at 2-3. Steve has unambiguously stated that the latter three
of these representations were inaccurate. Steve Dep. 29:2-21,
31:3-21. As noted above, Steve has also described Warren as a
construction company that specializes in the propane and
natural gas industry. Id. at 12:11-14. While this
work certainly involves pipes, Warren has admitted-through
its failure to respond to Owners's requests for
admission-that neither Warren nor Steve are “licensed
plumber[s]” pursuant to S.C. Code § 40-11-410. ECF
No. 28-17, Requests for Admission.
of these misrepresentations-issued a policy providing the
requested coverage for the period of January 22, 2015 to
January 22, 2016 (the “Policy”). ECF No. 10
¶ 11. Around a month after the Policy was issued, Warren
hired Scott Gerhard (“Gerhard”). Gerhard was
injured on December 7, 2015 when nitrogen was released from a
propane tank he was working on nearly 20 feet above the
ground, causing him to fall and suffer second degree burns.
ECF No. 28 at 4-5; ECF No. 34 at 6. Gerhard made a claim to
Owners for workers' compensation benefits, which Owners
denied on the ground that there was no valid policy in place.
ECF No. 37-10, Owners's Denial Letter. Gerhard then filed
a hearing request with the South Carolina Workers'
Compensation Commission (“SCWCC”). Despite
denying coverage, Owners initially hired an attorney to
represent Owners and Warren in connection with Gerhard's
claim. ECF No. 37-11, Email to Aura Lewis. On April 7, 2016,
another attorney appeared in Gerhard's SCWCC case solely
on Owners's behalf, and asked the court to find that the
Policy did not cover Gerhard's claim. ECF No. 37 at 6.
Owners later filed a motion in the SCWCC proceedings to have
the Policy declared void ab initio. Id.
This motion was denied, pending discovery. ECF No. 44,
Dworjanyn Letter. Gerhard's case before the SCWCC was
then settled, without the SCWCC making any decision regarding
March 2, 2016, Owners filed the instant federal action
seeking to have the Policy declared void ab initio.
ECF No. 1 ¶¶ 20-23. On April 11, 2016, recognizing
the jurisdictional problems presented by its request, Owners
amended its complaint to state that “[n]o
employees' rights are involved in this action, as this is
solely a dispute between Owners and the insured, Warren
Mechanical. The issues in this case are not proper before the
[SCWCC].” ECF No. 10 ¶ 14. Owners has further
clarified that “this litigation was initiated to
provide for the determination as to Owners' duties and
obligations under the policy as to any other potential claims
that may arise under the policy at issue, ” and as
such, the court need not “address issues relating to
any [of Gerhard's] claims.” ECF No. 39 at 2.
filed its motion to compel Warren to pay expert fees on
December 15, 2016. ECF No. 26. Owners then filed its motion
for summary judgment on December 20, 2016. ECF No. 28. Warren
filed a response to the motion to compel on December 29,
2016, ECF No. 34, and Owners filed a reply on January 3,
2017, ECF No. 35. On January 9, 2017, Warren filed a motion
to dismiss, or in the alternative, for summary judgment in
lieu of a response to Owners's motion for summary
judgment. ECF No. 37. Owners filed a joint reply in support
of its motion for summary judgment and in response to
Warren's motion for summary judgment on January 20, 2017.
ECF No. 39. Warren filed a reply on January 27, 2017. ECF No.
41. The matters have been fully briefed and are now ripe for
the court's review.
Subject Matter Jurisdiction
determination of subject matter jurisdiction must be made at
the outset before any decision on the merits. Steel Co.
v. Citizens for a Better Environment, 523 U.S. 83
(1998). “The plaintiff bears the burden of persuasion
if subject matter jurisdiction is challenged under Rule
12(b)(1).” Williams v. United States, 50 F.3d
299, 304 (4th Cir. 1995). If the plaintiff cannot overcome
this burden, then the claim must be dismissed. Welch v.
United States, 409 F.3d 646, 651 (4th Cir. 2005). When a
party contends that “the complaint  fails to allege
facts upon which subject matter jurisdiction can be based[, ]
. . . all the facts alleged in the complaint are assumed to
be true.” Luna-Reyes v. RFI Const., LLC, 57
F.Supp.3d 495, 499 (M.D. N.C. 2014) (quoting Adams v.
Bain, 697 F.2d 1213, 1219 (4th Cir. 1982)). “[A]
trial court should dismiss under Rule 12(b)(1) only when the
jurisdictional allegations are ‘clearly . . .
immaterial, made solely for the purpose of obtaining
jurisdiction or where such a claim is wholly unsubstantial
and frivolous.'” Kerns v. United States,
585 F.3d 187, 193 (4th Cir. 2009) (quoting Bell v.
Hood, 327 U.S. 678, 682 (1946)).
judgment shall be granted “if the pleadings, the
discovery and disclosure materials on file, and any
affidavits show 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(c). “By its
very terms, this standard provides that the mere existence of
some alleged factual dispute between the parties will not
defeat an otherwise properly supported motion for summary
judgment; the requirement is that there be no genuine issue
of material fact.” Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 247-48 (1986). “Only disputes
over facts that might affect the outcome of the suit under
the governing law will properly preclude the entry of summary
judgment.” Id. at 248. “[S]ummary
judgment will not lie if the dispute about a material fact is
‘genuine, ' that is, if the evidence is such that a
reasonable jury could return a verdict for the nonmoving
the summary judgment stage the judge's function is not
himself to weigh the evidence and determine the truth of the
matter but to determine whether there is a genuine issue for
trial.” Id. at 249. When the party moving for
summary judgment does not bear the ultimate burden of
persuasion at trial, it may discharge its burden by
demonstrating to the court that there is an absence of
evidence to support the non-moving party's case.
Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986).
The non-movant must then “make a showing sufficient to
establish the existence of an element essential to that
party's case, and on which that party will bear the
burden of proof at trial.” Id. at 322. The
court should view the evidence in the light most favorable to
the non-moving party and draw all inferences in its favor.
Anderson, 477 U.S. at 255.
Motion to Compel Payment of Expert Fees
Rule of Civil Procedure 26(b)(4)(E) states that:
“Unless manifest injustice would result, the court must
require that the party seeking discovery: (i) pay the expert
a reasonable fee for time spent in responding to discovery
under Rule 26(b)(4)(A) or (D); and (ii) for discovery under
(D), also pay the other party a fair portion of the fees and
expenses it reasonably incurred in obtaining the expert's
facts and opinions.”
Fed. R. Civ. P. 26(b)(4)(E).
generally rely on the following factors to determine whether
an expert fee is “reasonable”:
(1) the witness's area of expertise; (2) the education
and training that is required to provide the expert insight
that is sought; (3) the prevailing rates for other comparably
respected available experts; (4) the nature, quality and
complexity of the discovery responses provided; (5) the cost
of living in the particular geographic area; (6) the fee
being charged by the expert to the party who retained him;
(7) fees traditionally charged by the expert on related