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Powell v. State Farm Fire and Casualty Co.

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

May 17, 2018

Ethel Powell, Plaintiff,
v.
State Farm Fire and Casualty Company, Defendant.

          ORDER

          R. Bryan Harwell United States District Judge.

         This is an action for breach of contract and bad faith refusal to pay underinsured motorist (“UIM”) benefits. On March 27, 2018, the Court entered an order denying Defendant's motion for summary judgment on both the breach of contract and bad faith claims and denying Plaintiff's cross-motion for partial summary judgment on the breach of contract claim. See ECF No. 51. The parties have now filed motions to reconsider the March 27 order pursuant to Rule 54(b) of the Federal Rules of Civil Procedure, see ECF Nos. 53 & 54, and they have each responded to the motions. See ECF Nos. 55, 56, & 57. The Court denies both motions for the reasons herein.[1]

         Legal Standard

         Federal Rule of Civil Procedure 54(b) governs the Court's reconsideration of interlocutory orders such as one denying summary judgment. See generally Carlson v. Boston Sci. Corp., 856 F.3d 320, 325 (4th Cir. 2017); Am. Canoe Ass'n v. Murphy Farms, Inc., 326 F.3d 505, 515 (4th Cir. 2003). Rule 54(b) permits a district court to revise “any order or other decision . . . that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties . . . at any time before the entry of a judgment adjudicating all the claims and all the parties' rights and liabilities.” Fed.R.Civ.P. 54(b).

         The Fourth Circuit recently articulated the standard for evaluating Rule 54(b) motions:

Compared to motions to reconsider final judgments pursuant to Rule 59(e) of the Federal Rules of Civil Procedure, Rule 54(b)'s approach involves broader flexibility to revise interlocutory orders before final judgment as the litigation develops and new facts or arguments come to light. . . .
[However], the discretion Rule 54(b) provides is not limitless. For instance, courts have cabined revision pursuant to Rule 54(b) by treating interlocutory rulings as law of the case. The law-of-the-case doctrine provides that in the interest of finality, when a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages in the same case. Thus, a court may revise an interlocutory order under the same circumstances in which it may depart from the law of the case: (1) a subsequent trial produc[ing] substantially different evidence; (2) a change in applicable law; or (3) clear error causing manifest injustice. This standard closely resembles the standard applicable to motions to reconsider final orders pursuant to Rule 59(e), but it departs from such standard by accounting for potentially different evidence discovered during litigation as opposed to the discovery of new evidence not available at trial.

Carlson, 856 F.3d at 325 (second alteration in original) (internal citations and quotation marks omitted); see also Acosta v. Hilton Grand Vacations Co., No. 4:15-cv-00495-RBH, 2017 WL 2957795 (D.S.C. July 11, 2017) (applying the Carlson standard).

         Discussion[2]

         I. Defendant's Motion to Reconsider - Bad Faith Claim

         Defendant seeks reconsideration of the Court's decision to deny summary judgment on Plaintiff's bad faith claim.[3] See ECF No. 53. Defendant argues: “In denying the plaintiff['s] motion for summary judgment as to [her] breach of contract claim, the Court determined that a jury could make a ‘reasonable inference' that there was no fourth policy. If a jury could reasonably conclude there was no fourth policy, it cannot be bad faith for [Defendant] to come to the same conclusion.” Id. at p. 53 (quoting ECF No. 51 at p. 10). In other words, Defendant contends it “should not be liable for bad faith where the Court has determined that a reasonable jury could find there was no fourth policy.” Id. at p. 2.[4]

         The Court rejects Defendant's argument because it conflates the meaning of the term “reasonable” as used in two different contexts. Specifically, Defendant confuses the meaning of “reasonable inference”-as applied in the legal standard of review for a summary judgment motion-with the term “unreasonable action, ” which is an element of an insurance bad faith claim. Compare SD3 II LLC v. Black & Decker (U.S.) Inc., 888 F.3d 98 (4th Cir. 2018) (“[O]n a motion for summary judgment, the court must draw all reasonable inferences in favor of the nonmoving party.” (internal quotation marks omitted and emphasis added)), with Crossley v. State Farm Mut. Auto. Ins. Co., 415 S.E.2d 393, 396-97 (S.C. 1992) (listing the third element of an insurance bad faith claim as “the insurer's . . . unreasonable action in breach of an implied covenant of good faith and fair dealing arising on the contract” (emphasis added)). In short, “reasonable” has different meanings here.[5]

         In its prior order, the Court was merely applying the summary judgment standard when it concluded “at least two reasonable inferences” could be drawn from the evidence-either that a fourth contract of insurance existed or that one did not exist-and therefore summary judgment was not warranted on the breach of contract claim. See ECF No. 51 at p. 10. The Court's conclusion in no way found as a matter of law that Defendant necessarily acted reasonably in concluding no fourth policy existed and thus was entitled to summary judgment on the bad faith claim; this conclusion simply meant there was a question of fact regarding whether a contract existed.[6] To be clear, even assuming arguendo that a fourth contract of insurance existed (by virtue of an oral binder given by Santangelo), there remain genuine issues of material fact regarding whether Defendant acted unreasonably by refusing to pay the UIM benefits allegedly owed thereunder.

         Although both a breach of contract claim and a bad faith claim both require the existence of a contract, [7] they are still separate causes of action.[8] And in this case, the Court has concluded genuine issues of material fact exist as to both Plaintiff's breach of contract and bad faith claims, and therefore ...


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