United States District Court, D. South Carolina, Florence Division
Marion Fowler, Esq., as Guardian ad Li tern for Jefferey L. Vanderhall, Assignee, Plaintiff,
State Farm Mutual Automobile Insurance Company, Defendant.
ORDER AND OPINION
RICHARD MARK GERGEL UNITED STATES DISTRICT COURT JUDGE.
matter is before the Court on Plaintiffs motion for judgment
on the pleadings (Dkt. No. 20) and Defendant's motion for
judgment on the pleadings (Dkt. No. 21). For the reasons set
forth below, the Court denies Plaintiffs motion for judgment
and grants Defendant's motion for judgment.
August 21, 2011, Jefferey Vanderhall was returning from his
job at Homes Motor Lodge in Florence, South Carolina, when he
was struck while riding his bicycle by a truck driven by
Maurice Washington. Vanderhall v. State Farm Mut. Auto.
Ins. Co., 4:14-cv-518-RMG, Dkt. Nos. 61-2 at 2; 75 at 3.
Mr. Vanderhall suffered severe injuries from the collision
and was unconscious for approximately a week after the
accident. On August 23, 2011, Mr. Vanderhall's mother,
Teresa Vanderhall, contacted the Hyman Law Firm and a member
of the firm came to Mr. Vanderhall's hospital room.
Vanderhall, Dkt. No. 78 at 2. Mr. Vanderhall
underwent surgery on that day and remained unconscious.
Id. The law firm took a picture of Mr. Vanderhall in
his hospital bed to document "the severity of his
injuries." Id. That same day, Teresa Vanderhall
executed a retainer agreement with the Hyman Law Firm on
behalf of Jefferey Vanderhall, indicating that she was the
"GAL for Jefferey." Id. At the time,
Teresa Vanderhall had not been appointed guardian ad litem
for Jefferey Vanderhall, who (being unconscious) was an
incapacitated person under South Carolina law. Id.
later, on August 24, 2011, William Hatfield, then an attorney
with the Hyman Law Firm, wrote Defendant State Farm Insurance
Company regarding Mr. Vanderhall. Mr. Hatfield indicated that
his firm "represents Jefferey L. Vanderhall" and
that Mr. Vanderhall had suffered a severe spinal cord injury
from being struck by a vehicle operated by Maurice Washington
and owned by its insured, Priscilla J. Ford. Id. Mr.
Hatfield's letter stated he would give the carrier
"one opportunity to settle this claim by tendering . . .
liability limits in exchange for a Covenant Not to Execute
provided that said tender is made in writing on or before
Friday, September 2, 2011, at noon." Id. at 3.
Mr. Hatfield explained that if State Farm refused to tender
its limits by the stated deadline, the offer would be
withdrawn and Mr. Vanderhall would proceed to sue Maurice
Washington for negligence and Priscilla Ford for negligent
Farm responded to Mr. Hatfield's August 24, 2011 letter
on September 1, 2011, indicating it was "willing to
settle your client's claim for $25, 000 [the policy
limit] in exchange for a covenant not to execute."
Id. The letter then stated, "This settlement is
inclusive of all economic damages, known and unknown, and any
liens, assignments or statutory rights of recovery."
That language is standard language in settlement agreements
and covenants not to execute in South Carolina. Id.
asserted the additional language proposed constituted a
counter offer and a rejection of Plaintiffs August 24, 2011
offer. Id. On September 27, 2011, he sued Maurice
Washington and Priscilla Ford in the Florence County Court of
Common Pleas. Vanderhall v. Wilson, 201
l-CP-21-2555. Thereafter, on November 6, 2013, Plaintiff
entered into an agreement with Mr. Washington and Ms. Ford
that provided (1) a confession of judgment of $7 million; and
(2) a covenant not execute against Mr. Washington and Ms.
Ford beyond the policy limits, which also provided for their
protection from any liens or other claims by third parties.
Vanderhall, Dkt. No. 1-1 at 11-13. Plaintiff, as an
assignee of Mr. Washington and Ms. Ford, again filed suit in
the Florence County Court of Common Pleas, this time against
State Farm for claims of breach of the implied covenant of
good faith and fair dealing, breach of contract, and related
claims. Vanderhall v. State Farm Mut. Auto. Ins.
thereafter timely removed the action and moved for summary
judgment. This Court granted summary judgment for Defendant
on March 30, 2015. The Court held (1) that Mr. Hatfield's
settlement offer of August 24, 2011 was a legal nullity that
cannot constitute a basis for a bad faith claim because Mr.
Hatfield had no authority to act on behalf of Mr. Vanderhall
at that time, because Mr. Vanderhall was then an unconscious
person and Ms. Vanderhall was not his guardian ad litem, and
(2) that, even if the settlement offer were valid,
Defendant's response to the offer could not constitute
bad faith as a matter of law. Vanderhall, Dkt. No.
78. Plaintiff appealed.
on June 5, 2015, in his suit against Mr. Washington and Ms.
Ford still pending in the Florence County Court of Common
Pleas, Mr. Hatfield on behalf of Plaintiff filed a
conditional motion to set aside the settlement and $7 million
confessed judgment, to appoint a guardian ad litem for Mr.
Vanderhall, and to place Mr. Vanderhall's suit against
Mr. Washington and Ms. Ford on the active roster, in the
event this Court's order were affirmed on appeal. (Dkt.
No. 1-8.) Mr. Hatfield's motion for appointment of a
guardian ad litem represented that it was made because
"the Honorable Richard Gergel ruled that Vanderhall
lacks the capacity to sue without a guardian ad litem or
settle without court approval." (Id.) It did
not disclose that the basis for that ruling was Mr.
Vanderhall's one-week period of unconsciousness
two-and-a-half years before the motion for appointment of a
guardian ad litem. While Mr. Hatfield's motion for
appointment of a guardian ad litem for Mr. Vanderhall was
pending in state court, in his appeal of this Court's
order granting of summary judgment for State Farm on
Plaintiffs bad faith claim, Mr. Hatfield represented to the
Fourth Circuit that "there is no evidence that
Vanderhall lacks the capacity to contract. Now that this is
cleared up, Vanderhall asks that this Court accept
Vanderhall's undisputed capacity to contract." (Dkt.
No. 21-2 at 11 (reply brief of appellant filed on July 13,
2015 in Vanderhall v. State Farm Mut. Auto. Ins.
Co., 632 Fed.Appx. 103 (4th Cir. 2015)) (citation
Fourth Circuit affirmed the final judgment of this Court on
December 5, 2015.
Vanderhall, 632 Fed.Appx. at 104. The Fourth Circuit
noted, Vanderhall suggests in his brief that the district
court considered that his incapacity was due to his slight
brain damage or mild retardation; however, our reading of the
district court's order reveals no indication that it was
relying on any condition or period of time other than the
time Vanderhall was unconscious and in a coma.
Id. at n.1. Shortly thereafter, in January 2016, Mr.
Hatfield retained psychologist Alexis Sanders to evaluate Mr.
Vanderhall's mental competence to support of his
state-court motion for appointment of a guardian ad litem.
(Dkt. Nos. 39-1 ¶ 7, 1-9 at 3.) Dr. Sanders found that
Mr. VanderhalPs intellectual function was "Extremely
Low, " a finding consistent with Mr. Vanderhall's
school records. (Dkt. No. 1-9 at 3.) On June 14, 2016, the
Court of Common Pleas granted Plaintiffs motion to set aside
the 2013 settlement agreement and to appoint a guardian ad
litem, finding that Mr. Vanderhall is (and has been since
birth or early childhood) mentally incompetent and that his
incompetence rendered the 2013 settlement agreement void.
(Dkt. No. 1-9 at 4.)
case then proceeded to a jury verdict on April 11, 2017.
Plaintiff was awarded $15, 000, 000 in actual damages and
$60, 000, 000 in punitive damages. (Dkt. No. 1-11.) A day
earlier, Plaintiff and Mr. Wilson entered into an agreement
in which Mr. Wilson assigned his claims against Defendant to
Plaintiff, who agreed not to enforce collection of a judgment
against Mr. Wilson. (Dkt. No. 24-1.) Plaintiff and Ms. Ford
had already entered into a similar agreement on August 11,
2016. (Dkt. No. 24-2.)
April 26, 2017 (two weeks after the jury verdict), Plaintiff,
again an assignee of Mr. Wilson and Ms. Ford, filed the
present action in the Florence Division. The parties are the
same, the attorneys are the same, and the claims are the same
as the previous bad faith action against State Farm, except
that Plaintiff asserts a negligence claim that is identical
to the bad faith claim. (Dkt. No. 1.) Plaintiff however has a
new theory of the case. Plaintiff asserts State Farm breached
its duty of care to its insureds by failing to seek
appointment of a guardian ad litem for Plaintiff. (Dkt. No.