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Evans v. Nautilus Insurance Co.

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

January 12, 2018

James N. Evans, individually and as owner/agent of Club Ro-Za Bar & Grill, Club Ro-Za Bar & Grill d/b/a Club Ro-Ze Plaintiffs,
v.
Nautilus Insurance Company, Defendant.

          ORDER

          DAVID C. NORTON, UNITED STATES DISTRICT JUDGE

         This matter is before the court on defendant Nautilus Insurance Company's (“Nautilus”) motion for summary judgment, ECF No. 23. For the reasons set forth below, the court grants the motion.

         I. BACKGROUND

         This matter arises out of an insurance contract. Compl. ¶ 2. James N. Evans (“Evans”) owns and operates Club Ro-Za Bar and Grill (“Club Ro-Za”) (together, “plaintiffs”). Nautilus had issued a commercial general liability insurance policy (the “Policy”) for Club Ro-Za, with effective dates of February 2, 2012 to February 2, 2013. Pl.'s Resp., 2. On September 3, 2012, Tirele Green (“Green”) was in a vehicle when he was shot by a patron of Club Ro-Za. Id. Plaintiffs contend that Green was shot inadvertently while the patron fired his weapon indiscriminately as a result of his drunken state. Id. Nautilus, on the other hand, contends that the shooting was an intentional assault. On or about November 5, 2014, Green filed an action in the Charleston County Court of Common Pleas against Evans, alleging premises liability resulting from plaintiffs' negligence in connection with the shooting. Compl. ¶ 5. Shortly thereafter, Evans contacted Nautilus to request that it defend and indemnify plaintiffs in accordance with the Policy. Id. ¶ 6. Nautilus responded that the Policy provided no coverage and refused to provide a defense. Id. ¶ 7. A default judgment was eventually entered against plaintiffs, granting Green $250, 000 in actual damages and $1, 250, 000 in punitive damages. Id. ¶ 9.

         Plaintiffs filed the instant action against Nautilus in state court on February 16, 2017. ECF No. 1. The action was removed to this court on March 22, 2017. ECF No. 5. Plaintiffs filed an amended complaint on August 3, 2017, alleging the following causes of action: (1) breach of contract; (2) bad faith; and (3) punitive damages. ECF No. 19. On September 27, 2017, Nautilus filed a motion for summary judgment, ECF No. 23, to which plaintiffs responded on October 23, 2017, ECF No. 28. Nautilus replied on October 27, 2017, ECF No. 30, and plaintiffs filed a sur reply on November 3, 2017, ECF No. 32. The court held a hearing on this motion on December 12, 2017. This motion is now ripe for the court's review.

         II. STANDARD

         Summary 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). Rule 56(c) of the Federal Rules of Civil Procedure requires that the district court enter judgment against a party who, ‘after adequate time for discovery . . . fails to 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.'” Stone v. Liberty Mut. Ins. Co., 105 F.3d 188, 190 (4th Cir. 1997) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)). “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 party.” Id.

         “[A]t 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.

         Any reasonable inferences are to be drawn in favor of the nonmoving party. Anderson, 477 U.S. at 255, Webster v. U.S. Dep't of Agric., 685 F.3d 411, 421 (4th Cir. 2012). However, to defeat summary judgment, the nonmoving party must rely on more than conclusory allegations, mere speculation, the building of one inference upon another, or the mere existence of a scintilla of evidence. See Anderson, 477 U.S. at 252; Stone, 105 F.3d at 191. Rather, “a party opposing a properly supported motion for summary judgment . . . must ‘set forth specific facts showing that there is a genuine issue for trial.'” Bouchat, 346 F.3d at 522 (quoting Fed.R.Civ.P. 56(e) (2002) (amended 2010)). If the adverse party fails to provide evidence establishing that the fact-finder could reasonably decide in his favor, then summary judgment shall be entered “regardless of ‘[a]ny proof or evidentiary requirements imposed by the substantive law.'” Id. (quoting Anderson, 477 U.S. at 248).

         III. DISCUSSION

         Nautilus requests that the court grant summary judgment on all of plaintiffs' causes of action based on two grounds: (1) no insurance policy existed on the date of the underlying incident; and (2) even if the policy had been in effect, the shooting constitutes an excluded assault or battery. Mot. Sum. Judg., 1. The court grants summary judgment based on the non-existence of the policy on the date of the shooting and refrains from addressing the question of whether the shooting constitutes an excluded assault or battery.

         In February 2012, Nautilus issued the Policy to Ro-Za Bar and Grill, with a policy period extending from February 2, 2012 to February 2, 2013. ECF No. 23-2. On February 2, 2012, plaintiffs entered into a finance agreement with IPFS Corporation (“IPFS”) to finance the insurance policy issued by Nautilus. Mot. Sum. Judg., 3. Pursuant to this financing agreement, plaintiffs made monthly payments to IPFS and appointed IPFS as their attorney-in-fact, giving IPFS full authority to cancel the Policy if plaintiffs were to default on their payments. Id. Plaintiffs failed to make a scheduled payment on August 2, 2012, and IPFS mailed plaintiffs a notice of intent to cancel the Policy on August 7, 2012, warning that the Policy would be cancelled if plaintiffs failed to make the overdue payment within ten days. Id. When plaintiffs did not make the payment within ten days, IPFS mailed a Notice of Cancellation to Nautilus on August 27, 2012, cancelling the policy effective September 1, 2012. Id. The shooting of Green occurred two days later.

         Nautilus argues that due to the above-referenced notices, the Policy was not in effect at the time of the shooting, and so Nautilus owed no duty to defend or indemnify plaintiffs in the underlying action. Id. at 9. In response, plaintiffs contend that IPFS and Nautilus's attempted cancellation did not comply with South Carolina Code § 38-39-90, and thus the Policy remained in effect at the time of the shooting. Pl.'s Resp., 4. South Carolina Code § 38-39-90, titled “Cancellation of insurance contracts by premium service company, ” provides as follows:

(a) If a premium service agreement contains a power of attorney enabling the company to cancel an insurance contract listed in the agreement, the insurance contract may not be canceled by the premium service company unless the ...

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