United States District Court, D. South Carolina, Greenville Division
OPINION AND ORDER
C. Coggins, Jr. United States District Judge.
matter is before the Court on Plaintiff's Motion to
Expedite Review and for Preliminary Injunction,
Plaintiff's Motion for Partial Judgment on the Pleadings,
Defendant's Motion for Summary Judgment, and
Plaintiff's Motion for Partial Summary Judgment. ECF Nos.
26, 34, 57, 58. With respect to the Motion to Expedite Review
and for Preliminary Injunction and the Motion for Partial
Judgment on the Pleadings, all responses and replies have
been filed. ECF Nos. 33, 37, 42, 44. Plaintiff filed a
Response in Opposition to Defendant's Motion for Summary
Judgment on January 31, 2018, and Defendant filed a Reply on
February 5, 2018. ECF Nos. 62, 64. Defendant filed a Response
in Opposition to Plaintiff's Motion for Partial Summary
Judgment on January 31, 2018. ECF No. 63. Accordingly, the
Motions are ripe for review.
action was filed on September 5, 2017, seeking a declaration
that Defendant is obligated under a liability insurance
policy to appear, defend, and indemnify Plaintiff in
connection with criminal charges filed against him. ECF No. 1
at 1. The parties agree that Defendant issued Directors and
Liability Insurance Policy No. SDO1066435 04 (“the
Policy”) to GrandSouth Bank (“the Bank”)
for the policy period from August 6, 2014, through August 6,
2017. ECF No. 57-1. Plaintiff was a Vice-President of the
Bank during this time. ECF No. 57 at 2. Prior to issuance of
the Policy, the Bank had been involved in two civil actions,
Aquent LLC v. Bruce Gregory Harrison, et al., C/A
No. 09-cvs-9613 ( N.C. 2009) and BHC Interim Funding II,
LP v. Compensation Management Inc., et al., C/A No.
11-cvs-6696 ( N.C. 2012) (“the prior civil
suits”) which involved an allegedly improper
factoring scheme executed between employees of the
Bank and a bank customer. ECF No. 58-1 at 2. Plaintiff was
not named in either of the prior civil suits. Id. at
26, 2016, certain other employees of the Bank were indicted
in the Middle District of North Carolina. It appears
Defendant initially determined coverage for these individuals
was appropriate under the Policy. However, on January 4,
2017, Defendant denied coverage claiming that the prior civil
suits and the criminal indictment were considered a single
claim because they constitute “interrelated wrongful
acts, ” as defined in the Policy, and invoked the prior
and pending litigation policy exclusion. ECF No. 16-3.
Therefore, according to the terms of the Policy, that claim
was deemed to be made no later than November 13, 2009, and so
predated the Policy. Id. These other employees filed
suit and have now settled with Defendant. See C/A
No. 6:17-cv-00011-MGL (D.S.C. 2017).
was charged in a third superseding indictment issued on
August 29, 2017. ECF No. 16-2 at 1. Defendant denied coverage
for Plaintiff on September 27, 2017. ECF No. 57-4. The
indictment describes the prior factoring agreement between
the Bank and its customer and describes conduct dating back
to 2003, with conduct of Plaintiff dating back to 2008. ECF
No. 16-2. At issue in the present action is whether the prior
civil suits bar coverage for Plaintiff under the terms of the
states, as to a party who has moved for summary judgment,
“[t]he court shall grant summary judgment if the movant
shows that there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of
law.” Fed.R.Civ.P. 56(a). A fact is
“material” if proof of its existence or
non-existence would affect disposition of the case under
applicable law. Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 248 (1986). An issue of material fact is
“genuine” if the evidence offered is such that a
reasonable jury might return a verdict for the non-movant.
Id. at 257. When determining whether a genuine issue
has been raised, the court must construe all inferences and
ambiguities against the movant and in favor of the non-moving
party. United States v. Diebold, Inc., 369 U.S. 654,
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 movant 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 specific, material facts exist that
give rise to a genuine issue. Id. Under this
standard, the existence of a mere scintilla of evidence in
support of the non-movant's position is insufficient to
withstand the summary judgment motion. Anderson, 477
U.S. at 252. Likewise, conclusory allegations or denials,
without more, are insufficient to preclude granting the
summary judgment motion. Ross v. Commc'ns Satellite
Corp., 759 F.2d 355, 365 (4th Cir.1985), overruled
on other grounds, 490 U.S. 228 (1989). “Only
disputes over facts that might affect the outcome of the suit
under the governing law will properly preclude the entry of
summary judgment. Factual disputes that are irrelevant or
unnecessary will not be counted.” Anderson,
477 U.S. at 248. Further, Rule 56 provides in pertinent part:
asserting that a fact cannot be or is genuinely disputed must
support the assertion by:
(A) citing to particular parts of materials in the record,
including depositions, documents, electronically stored
information, affidavits or declarations, stipulations
(including those made for purposes of the motion only),
admissions, interrogatory answers, or other materials; or
(B) showing that the materials cited do not establish the
absence or presence of a genuine dispute, or that an adverse
party cannot produce admissible evidence to support the fact.
Fed. R. Civ. P. 56(c)(1). Accordingly, when Rule 56© has
shifted the burden of proof to the non-movant, he must
produce existence of a factual dispute on every element
essential to his action that he bears the burden of adducing
at a trial on the merits.
to the Declaratory Judgment Act, 28 U.S.C. § 2201, a
district court “may declare the rights and other legal
relations of any interested party seeking such declaration,
whether or not further relief is or could be sought.”
The Act, however, gives the court the discretion to decline
issuing the judgment. Aetna Cas. & Sur. Co. v.
Ind-Com Elec. Co., 139 F.3d 419, 421 (4th Cir. 1998);
Wilton v. Seven Falls Co., 515 U.S. 277, 286 (1995)
(The Declaratory Judgment Act “confer[s] on federal
courts unique and substantial discretion in deciding whether
to declare the rights of litigants.”). “[W]hen a
useful purpose will not be served, statute and practice have
established the rule that the judgment may be refused when it
is not necessary or proper at the time under all the
circumstances.” Aetna Cas. & Sur. Co. v.
Quarles, 92 F.2d 321, 325 (4th Cir. 1937) (internal
quotation marks omitted).
federal court exercising diversity jurisdiction applies state
substantive law. Gasperini v. Ctr. for Humanities,
Inc., 518 U.S. 415, 427 (1996) (citations omitted). It
is undisputed that the substantive law of the State of South
Carolina applies to this matter. Under the South Carolina
law, insurance policies are subject to the general rules of
contract construction. B.L.G. Enters., Inc. v. First
Financial Ins. Co., 514 S.E.2d 327 (S.C. 1999). The
court must give policy language its plain, ordinary, and
popular meaning. Id. When a contract is unambiguous,
clear, and explicit, it must be construed according to the
terms the parties have used. Id.; see
Auto-Owners Ins. Co. v. Carl Brazell Builders, Inc.,
162-163, 588 S.E.2d 112, 115 (S.C. 2003). This court must
enforce, not write, contracts of insurance and must give
policy language its plain, ordinary, and popular meaning.
Id. An insurer's obligation under a policy of
insurance is defined by the terms of the policy itself and
cannot be enlarged by judicial construction. South
Carolina Ins. Co. v. White, 390 S.E.2d 471 (S.C. Ct.
policy clause extending coverage must be liberally construed
in favor of coverage. Torrington Co. v. Aetna Cas. and
Sur. Co., 216 S.E.2d 547 (S.C. 1975). Insurance policy
exclusions are construed most strongly against the insurance
company, which also bears the burden of establishing the
exclusion's applicability. Owners Ins. Co. v.
Clayton, 614 S.E.2d 611, 614 (S.C. 2005); Boggs v.
Aetna Cas. and Sur. Co., 252 S.E.2d 565 (S.C. 1979).
However, if the intention of the parties is clear, courts
have no authority to torture the meaning of policy language
to extend coverage that was never intended by the parties.
Sphere Drake Ins. Co. v. Litchfield, 438 S.E.2d 275
(S.C. Ct. App. 1993); S.C. Farm Bureau Mut. Ins. Co. v.
Wilson, 544 S.E.2d 848, 850 (S.C. Ct. App. 2001).
provision is ambiguous, the intent of the parties controls.
See Holcombe v. Orkin Exterminating Co., Inc., 317
S.E.2d 458 (S.C. Ct. App. 1984). Although the interpretation
of a contract is generally a matter of law, the intent of the
parties becomes a question of fact for the jury when the
contract is ambiguous. Kumpf v. United Tel. Co., 429
S.E.2d 869 (S.C. Ct. App. 1993). Accordingly, summary
judgment is not appropriate where, due to an ambiguity, the
intent of the parties is at issue.