United States District Court, D. South Carolina, Charleston Division
C. NORTON UNITED STATES DISTRICT JUDGE
matter is before the court on defendant The Travelers
Indemnity Company's (“Travelers”) motion for
summary judgment, ECF No. 118. For the reasons set forth
below, the court denies the motion for summary judgment
declaratory action and insurance coverage case stems from an
underlying action that was before this court, Vititoe v.
Bridgestone Americas Tire Operations, Inc., Case No.
2:12-cv-01844-DCN (“underlying action”), where
plaintiff Flexi-Van Leasing, Inc. (“Flexi-Van”)
was a named defendant, among others. In the underlying
action, Charles Vititoe (“Vititoe”) alleged that
he was working on a semi-trailer's rim assembly on the
truck's right rear tire when the rim assembly exploded
and injured him. Vititoe and his wife brought several causes
of action against Flexi-Van because the rim assembly that
injured Vititoe was affixed to a chassis owned by Flexi-Van.
time of Vititoe's injury, the chassis was on lease to Zim
Integrated Shipping Services Company, Inc.
(“Zim”). Zim contributed the chassis to the South
Atlantic Consolidated Chassis Pool (“SACP”).
Interstar North America, Inc., (“Interstar”)
entered into a Master Maintenance and Repair Agreement
(“the Agreement”) with Flexi-Van-as SACP
manager-to be the SACP chassis maintenance and repair vendor.
Pursuant to the Agreement, Interstar agreed to indemnify,
defend, and hold harmless SACP and Flexi-Van as its manager
from suits arising from or in connection with Interstar's
negligence in complying with Interstar's duties under the
Agreement. Appendix B of the Agreement required Interstar to
name SACP and its manager as additional insureds on
Interstar's insurance policy and maintain general
liability insurance of at least $10, 000, 000 per occurrence.
Interstar fulfilled this requirement by obtaining a written
commercial insurance policy (“the Policy”) from
Travelers and adding Flexi-Van as an additional insured.
to the Agreement and the Policy, Flexi-Van tendered its
defense in the underlying action to Travelers. Initially
Travelers agreed to defend and indemnify Flexi-Van and
informed Flexi-Van that Mark Wall (“Wall”) would
be Flexi-Van's attorney. On March 27, 2013, Travelers
sent Flexi-Van a reservation of rights letter
(“Reservation of Rights Letter”) that explained
that Travelers would not defend or indemnify Flexi-Van for
issues outside of Travelers's coverage. Travelers
explained that this could occur if Flexi-Van was liable as a
result of its own independent acts, omissions, or exclusions,
or if the underlying action fell within the Policy's
“Aircraft, Auto or Watercraft” exclusion. ECF No.
34-7 at 4. On June 28, 2013, Flexi-Van expressed its opinion
that there was a conflict between Travelers and Flexi-Van so
that Wall could no longer protect Flexi-Van's interests.
In particular, Flexi-Van asked Wall to bring Interstar as a
third-party defendant into the underlying action, and Wall
failed to do so, stating that “Travelers has not
directed me to start a 3rd party [action] against them and
will not pay for it.” ECF No. 34-8 at 3. As a result,
Flexi-Van terminated its representation with Wall and hired a
substitute counsel. Id. at 2. On July 26, 2013,
Travelers sent Flexi-Van a letter informing Flexi-Van that it
would not pay for Flexi-Van's substitute counsel. ECF No.
34-10 at 2. As a result, Flexi-Van filed the instant suit on
April 24, 2015. Flexi-Van's complaint brings the
following causes of action: (1) a declaratory judgment that
it is entitled to a defense and indemnity from Travelers for
the claims asserted in the underlying action; (2) breach of
contract for failing to defend and indemnify; and (3) breach
of the implied obligation of good faith and fair dealing.
Compl. ¶¶ 18-44.
filed a motion for summary judgment on June 1, 2017, ECF No.
80, and Flexi-Van filed a motion for partial summary judgment
or, in the alternative, for certification on June 2, 2017,
ECF No. 81. The court issued an order on the motions on
December 7, 2017, granting Travelers's motion with
respect to the bad faith claim but denying it with respect to
the breach of contract claim. The court found there was
“insufficient facts and evidence before the court to
grant summary judgment” on Traveler's duty to
indemnify because the underlying action was ongoing, making
it “unclear what liability Flex-Van will incur and
whether Travelers's duty to indemnify will be
triggered.” ECF No. 95 at 18. As for the duty to
defend, the court held that there was “a genuine issue
of material fact as to whether an actual conflict arose such
that Travelers breached its duty to defend.”
Id. at 22.
underlying action, Flexi-Van filed a third-party complaint
against InterStar, bringing causes of action for (1) breach
of contract for failure to defend and indemnify, (2)
contractual indemnity, (3) equitable indemnity, (4) negligent
hiring, (5) negligent supervision, and (6) negligent training
(“third-party underlying action”). In response,
InterStar brought a third-party counterclaim against
Flexi-Van, alleging that Flexi-Van breached the Agreement by
terminating the defense provided by Interstar. The
third-party underlying action was bifurcated from the
underlying action, and a trial on the third-party underlying
action was held. On February 8, 2018, the jury in the
third-party underlying action returned a verdict against
Flexi-Van in Flexi-Van's breach of contract and
contractual indemnity claims against InterStar. After the jury
also returned a verdict in favor of Interstar in
Interstar's breach of contract counterclaim, Travelers
renewed its motion for summary judgment for the breach of
contract claim in the instant action. Travelers filed its
motion on June 12, 2018. ECF No. 118. Flexi-Van responded on
August 20, 2018, ECF No. 124, and Travelers replied on August
27, 2018, ECF No. 125. The court held a hearing on the motion
on August 29, 2018.
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). “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. The court should view the evidence in
the light most favorable to the non-moving party and draw all
inferences in its favor. Id. at 255.
turning to the parties' arguments, the court finds it
necessary to first discuss the jury verdicts in the
third-party underlying action. In that action, Flexi-Van
alleged that Interstar breached the Agreement by
“failing to defend and indemnify and hold Flexi[-Van]
harmless in breach of Section 6.2 of the [Agreement]”
and that Flexi-Van was “entitled to contractual
indemnify from Interstar pursuant to Section 6.2 of the
[Agreement].” 12-cv-01844-DCN, ECF No. 49 at 18-19. The
jury charge for Flexi-Van's breach of contract cause of
action was as follows:
For its breach of contract claim, Flexi-Van must prove by a
preponderance of the evidence: (1) there was a contract
between the parties; (2) a breach of that contract; (3)
damages flowing therefrom; and (4) ...