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Crossroads Convenience LLC v. First Casualty Insurance Group Inc.

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

June 13, 2018

Crossroads Convenience, LLC, as successor to TFL Associates, LLC, and assignee of Anderson Oil Company, Inc., Plaintiff,
First Casualty Insurance Group, Inc., Defendant.


         Plaintiff Crossroads Convenience, LLC (“Crossroads”), as successor to TFL Associates, LLC (“TFL”), and assignee of Anderson Oil Company, Inc. (“Anderson Oil”), filed the above-captioned action against Defendant First Casualty Insurance Group, Inc. (“First Casualty”) alleging claims for breach of contract, negligence, negligent misrepresentation, promissory estoppel, constructive fraud, breach of fiduciary duties, equitable indemnity and quantum meruit in the context of an insured-insurer relationship. (ECF No. 26 at 7 ¶ 25-8 ¶ 29 & 10 ¶ 34-18 ¶ 75.)

         This matter is before the court on First Casualty's Motion for Summary Judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. (ECF No. 108.) Crossroads opposes the Motion in its entirety. (ECF No. 110.) For the reasons set forth below, the court GRANTS First Casualty's Motion for Summary Judgment.


         Crossroads is the successor in interest to TFL, which owned premises located at 324 Main Street North in Allendale, South Carolina (the “premises”). TFL leased the premises to Anderson Oil, which operated a convenience store there. Beginning on August 1, 2007, Anderson Oil subleased the premises to Varni Enterprises, LLC (“Varni”). (ECF No. 108-1 at 2 ¶ 3; see also ECF No. 108-2 at 2.) The sublease provided that Varni would maintain insurance policies for the premises “in such amounts as are reasonably necessary to protect [Anderson Oil] and such amounts shall be at least for the fair market value of the buildings and equipment.” (ECF No. 108-2 at 6.)

         In the summer of 2009, Varni contracted with First Casualty, as an agent, to procure an insurance policy that would meet the requirements set forth in the sublease for policy period July 2009 to July 2010. (See ECF No. 108-1 at 2 ¶ 4; see also ECF No. 108-5 at 2 ¶ 3.) Varni's principal, P.J. Patel, gave First Casualty's agent, Gary Kunce, explicit instructions that the limit of any insurance policy should be set at $400, 000.00 for each insured location. (ECF No. 108-5 at 2 ¶ 3; ECF No. 108-7 at 4:23-5:23.) Kunce was not provided a copy of the lease between Varni and Anderson Oil and “was never asked to interpret the lease or opine on Varni's insurance obligations under the lease.” (ECF No. 108-5 at 3 ¶ 5; ECF No. 110-1 at 5:14:4-25.)

         As a result of Patel and Kunce's interaction, First Casualty procured for Varni from Employers Mutual Casualty Company (“Employers Mutual”) an insurance policy on the premises numbered 4W1-61-92-10 (ECF No. 108-8) for the period July 1, 2009 to July 1, 2010. (See ECF No. 108-1 at 2 ¶ 4; see also ECF No. 108-5 at 2 ¶ 3.) In September 2009, Anderson Oil was added to the policy as an additional insured. (ECF No. 108-5 at 3 ¶ 6; ECF No. 108-9 at 2.) Thereafter, “Varni purchased coverage from Employers Mutual in 2010-2011and 2011- 2012, through First Casualty.”[1] (See ECF No. 108-1 at 2 ¶ 4; see also ECF No. 108-5 at 2 ¶ 3.) In 2011, Employers Mutual automatically increased to $420, 000.00 the limit on the policy for the premises “and advised First Casualty that the limits increase was non-negotiable.” (ECF No. 108-5 at 3 ¶ 8.)

         Under the terms of the insurance policy, in the event of damage or loss to covered property, Employers Mutual agreed to “[p]ay the value of the lost or damaged property” or to take equivalent action. (ECF No. 108-8 at 46.) “The policy contained an 80% co-insurance clause under which the insured would be penalized if the property were not insured to at least 80% of its replacement value.”[2] (ECF No. 108-5 at 3 ¶ 4.) Kunce explained the co-insurance clause to P.J. Patel, who asked [] no questions and appeared to understand [][the] explanation.” (Id.)

         On October 29, 2011, the convenience store located on the premises was destroyed by fire. (ECF No. 108-18 at 6.) On January 13, 2012, Varni executed a Sworn Statement in Proof of Loss (ECF No. 108-18 at 6) and submitted it to Employers Mutual, as required by the insurance policy. (Id.; see also ECF No. 45-3 at 7-8.) The proof of loss documents demonstrated that the estimated replacement cost of the convenience store building was $767, 653.21, that the insurance coverage limit needed to meet the 80% mark was $614, 122.57, that the coverage limit in the policy was $420, 000.00, that the actual cash value (“ACV”) of the building was $498, 974.59, that the total ACV of loss and damage was $317, 027.71, and that, after its $35, 000.00 deductible, Varni was owed $282, 027.71 under the insurance policy. (See ECF No. 108-18 at 2, 6.) Employers Mutual paid Varni $282, 027.21 on January 18, 2012 (ECF No. 45-7), and stamped Varni's Sworn Statement in Proof of Loss as having been received on January 19, 2012 (ECF No. 45-6).

         On October 20, 2014, Anderson Oil and TFL filed a Complaint against Varni, First Casualty and Employers Mutual in the Court of Common Pleas for Allendale County, South Carolina. (ECF No. 1-2 at 1-14.) Anderson Oil and TFL alleged that Varni had placed a special trust and confidence in First Casualty to select the proper insurance policy to meet the requirements of the sublease; that Varni had informed First Casualty that the policy would need to protect Anderson Oil's interest in the premises and cover an amount at least equal to the fair market value (“FMV”) of the premises; that First Casualty was aware that Anderson Oil had insured the premises for a replacement value of approximately $669, 000; and that Varni had reasonably relied on First Casualty's selection of insurance policy. (See Id. at 3 ¶ 13-4 ¶ 16.) Anderson Oil and TFL further alleged that First Casualty's selection of a policy with a coverage cap of $420, 000.00 and a provision that covers less than the full amount of property loss or damage if the cap fails to meet the 80% percent mark rendered the premises “significantly underinsured.” (Id. at 5 ¶ 17.) Anderson Oil and TFL asserted seven causes of action again First Casualty, including for breach of contract, negligence for breach of the duty to advise, negligent misrepresentation, promissory estoppel, constructive fraud, breach of fiduciary duty and equitable indemnity. (See Id. at 6 ¶ 29-7 ¶ 33 & 8 ¶ 38-13 ¶ 73.) Each cause of action asserted, under different theories, that First Casualty was liable to Varni and, for this reason, was also liable to TFL and Anderson Oil as real parties in interest or “equitable subrogees.” (See id.) In the breach of contract and promissory estoppel causes of action, Anderson Oil and TFL also asserted that First Casualty was directly liable to Anderson Oil and was therefore also liable to TFL as a real party in interest or equitable subrogee. (See Id. at 6 ¶ 29-7 ¶ 33 & 11 ¶¶ 54-58.)

         On May 14, 2015, Varni assigned to Anderson Oil any rights Varni may have had against First Casualty arising in connection with the insurance policy in exchange for Anderson Oil's agreement not to execute any judgment against Varni arising from the pending litigation. (See ECF No. 1-1.) On June 12, 2015, Anderson Oil and TFL filed an Amended Complaint in state court (see ECF No. 1-2 at 51-64) that repeated the allegations of the first Complaint verbatim except to specify the insurance policy number and to add a paragraph noting Varni's assignment of rights to Anderson Oil (see Id. at 53 ¶¶ 10, 11 & 55 ¶ 21). Thereafter, on June 25, 2015, First Casualty removed the matter to this court. (ECF No. 1.)

         On August 21, 2015, Anderson Oil moved to amend the Amended Complaint (ECF No. 19), which the court granted on September 28, 2015. (ECF No. 25.) In the “Second” Amended Complaint, Crossroads named itself as the sole Plaintiff and did not name Varni as a Defendant.[3](ECF No. 26.) The Second Amended Complaint restated nearly verbatim many of the allegations contained in the previous versions and contained the same seven causes of action against First Casualty that were asserted in prior versions of the Complaint.[4] However, in the Second Amended Complaint, Crossroads added an eighth cause of action against First Casualty for quantum meruit (see ECF No. 26 at 18 ¶¶ 71-75), which allegations contend that First Casualty is liable to Crossroads vis-à-vis Varni. (See Id. at 18 ¶¶ 71-75.)

         Following the court's order granting the Motion to Amend the Amended Complaint, Varni filed a Motion to Dismiss and/or for Judgment on the Pleadings (ECF No. 32) seeking to be dismissed with prejudice as Defendant on the ground that the Second Amended Complaint did not either name Varni as Defendant or seek any recovery from it. The court agreed and, on February 2, 2016, entered an Order granting the Motion to Dismiss and dismissing Varni from the action with prejudice. (ECF No. 36.) On March 4, 2016, First Casualty filed its first Motion for Summary Judgment.[5] (ECF No. 45.) In its Motion, First Casualty advanced three arguments supporting judgment in its favor. First, it argued that all the claims asserted against it in the Second Amended Complaint are barred by the three-year statute of limitations found in S.C. Code Ann. § 15-3-530(1), (5) (2016). (ECF No. 45 at 8-10.) Second, First Casualty argued that, because all the claims against it are premised not only on its liability to Varni but also on Varni's liability to Anderson Oil (which is in turn liable to Crossroads as TFL's successor in interest) (see Id. at 10), Varni's dismissal from the action with prejudice extinguished any potential liability Varni could have to Crossroads, and, consequently, Crossroads could not plausibly allege a cognizable injury to Crossroads flowing from First Casualty's actions allegedly injuring Varni (see Id. at 11-12). Third, First Casualty argued that all claims against it fail on their merits. (See Id. at 12-14.) Upon its review, the court entered an Order on March 27, 2017, only granting First Casualty's Motion as to the quantum meruit cause of action (see ECF No. 26 at 18 ¶¶ 71-75) and denying it “in all other respects.” (ECF No. 78 at 21.)

         Thereafter, on November 30, 2017, First Casualty filed the instant Motion for Summary Judgment asserting that it is entitled to summary judgment on the seven remaining claims against it “[b]ecause there is no evidence that First Casualty breached its sole duty-to procure coverage per its customer's request-or took on any additional duties.” (ECF No. 108 at 2.) On December 15, 2017, Crossroads filed its Response to the Second Motion for Summary Judgment opposing the request, to which First Casualty filed a Reply in support of its Motion for Summary Judgment on December 22, 2017. (ECF Nos. 110, 111.)


         The court has jurisdiction over this matter pursuant to 28 U.S.C. § 1332(a)(1) based on Crossroads' allegations that there is complete diversity of citizenship between it[6] and First Casualty and Employers Mutual, who are allegedly both citizens of a state other than South Carolina. (ECF No. 26 at 1 ¶ 1 & 2 ¶¶ 5, 6; see also ECF No. 1 at 4 ¶¶ 7, 9 & 10.) Moreover, the court is satisfied that the amount in controversy exceeds the sum of Seventy-Five Thousand ($75, 000.00) Dollars, exclusive of interest and costs. (ECF No. 26 at 5 ¶ 15 & 6 ¶ 19.)


         Summary judgment should be granted “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 the disposition of the case under the applicable law. Anderson v. Liberty Lobby Inc., 477 U.S. 242, 248-49 (1986). A genuine question of material fact exists where, after reviewing the record as a whole, the court finds that a reasonable jury could return a verdict for the nonmoving party. Newport News Holdings Corp. v. Virtual City Vision, 650 F.3d 423, 434 (4th Cir. 2011).

         In ruling on a motion for summary judgment, a court must view the evidence in the light most favorable to the non-moving party. Perini Corp. v. Perini Constr., Inc., 915 F.2d 121, 123-24 (4th Cir. 1990). The non-moving party may not oppose a motion for summary judgment with mere allegations or denial of the movant's pleading, but instead must “set forth specific facts” demonstrating a genuine issue for trial. Fed.R.Civ.P. 56(e); see Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986); Shealy v. Winston, 929 F.2d 1009, 1012 (4th Cir. 1991). All that is required is that “sufficient ...

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