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Columbia Insurance Co. v. Reynolds

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

August 7, 2019

Columbia Insurance Company, Plaintiff,
William Edmund Reynolds, Jr., Angela D. Reynolds, and Christopher Kamil Waymer, individually and d/b/a Q.E. Trucking, Defendants.


          Richard M. Gergel United States District Court Judge

         This matter is before the Court on Defendants William Edmund Reynolds, Jr., Angela D. Reynolds and Christopher Kamil Waymer's Motions to Dismiss[1] (Dkt. Nos. 10, 12). For the reasons set forth below, the Court denies the Motions.[2]

         I. Background

         This case arises out of a car accident on December 16, 2013 (the "accident") in Colleton County between William Reynolds and his wife, Angela Reynolds and Plaintiff Christopher Waymer. (Dkt. No. 1 at ¶ 10.) The Reynolds were injured during the accident. (Id. at ¶ 12.) Plaintiff Waymer was allegedly insured at the time by a $1 million commercial liability insurance policy issued by Defendant Columbia Insurance Company ("CIC"). (Id. at ¶ 11.) CIC retained an attorney, James M. Saleeby, Jr. to represent Defendant Waymer with regard to the accident, and Defendant Waymer ultimately also retained his own counsel, Matthew V. Creech. (Id. at ¶¶ 14 -15.) The Reynolds Defendants retained counsel as well. (Id. at ¶ 15.)

         On January 23, 2014, counsel for the Reynolds sent a demand letter, offering to settle for the $1 million policy limit. (Id. at ¶ 15.) The settlement offer was time limited and was not accepted by its expiration date of February 6, 2014. (Id. at ¶ 18.) Plaintiff CIC alleges that the offer was not accepted as Mr. Saleeby informed the Reynolds' counsel that he would be unable to respond to the settlement offer within the time limit as he was still investigating the claims and he had not received the Reynolds' medical records by the time the offer expired. (Id. at ¶¶ 22 - 35.)

         On April 4, 2014, the Reynolds separately filed a tort action against Plaintiff Waymer in the Colleton County Court of Common Pleas (the "State Court Actions").[3] (Id. at ¶ 36.) On April 28, 2014, CIC offered to tender the full policy limit as a settlement offer, however the Reynolds declined. (Id. at ¶¶ 38 - 39.) A subsequent "high-low" settlement offer by the Reynolds, for a "high" of $3, 500, 000 and a "low" of $1, 000, 000" dependent on a trier of facts determination of bad faith, was also declined by Defendant CIC. (Id. at ¶¶ 39 - 43.)

         While those actions were pending, Defendant CIC filed a declaratory judgment action in this Court seeking a declaration that its actions were reasonable. (See No. 2:14-4739-RMG, Dkt. No. 1, the "2014 Action.") This Court ultimately dismissed the case as not ripe as the issue of good faith and reasonableness were hypothetical during the pending State Court Actions, and alternatively dismissed the case on abstention grounds. See Columbia Ins. Co. v. Reynolds, 225 F.Supp.3d 375 (D.S.C. 2016). Notably, CIC alleges that before the resolution of the 2014 Action Waymer shared the defense file of his CIC-provided counsel, Saleeby, with the Reynolds' counsel in the State Court Actions, who is also serving as defense counsel to the Reynolds here. (Dkt. No. 1 at ¶ 46; See 2014 Action Docket Number 24.) The file allegedly included unredacted versions of documents that this Court had permitted redactions of. (Id.)

         After a damages hearing was held on October 24, 2018 in the State Court Actions, it was determined that those cases will result in damages against Waymer in excess of the $1 million policy limit. (Dkt. No. 1 at ¶ 48.) An Order of Judgment dated November 16, 2018 awarded $3.5 million to Angela Reynolds and $3 million to William Reynolds. (Dkt. No. 18-9.)

         Shortly after the October 24th damages hearing, both Waymer and CIC filed additional actions. On November 2, 2018, CIC filed this declaratory judgment action, seeking a declaration that CIC acted reasonably and in good faith in declining two settlement offers, and a declaration that Plaintiff Waymer breached his duty to cooperate by providing privileged documents he acquired from his CIC-provided counsel in the State Court Actions to opposing counsel in the State Court Actions. (Id. at ¶¶ 49 - 60.) Three days later, on November 5, 2018, Plaintiff Waymer filed the Bad Faith Action against Defendant CIC, alleging breach of contract and bad faith against CIC, and a civil conspiracy between CIC and its claim investigators. (See Bad Faith Action, Dkt. No. 1-1.) Concurrent with this Order, the Court denied a motion to remand the Bad Faith Action and dismissed the claim for civil conspiracy.

         Defendants now file these motions to dismiss, arguing that the case was not properly brought as a declaratory judgment as there is no actual controversy, and that the Court should decline to exercise jurisdiction over this declaratory judgment action based on the Bad Faith Action, which was previously pending as a parallel action in state court. (Dkt. No. 10.) Plaintiff CIC opposes the motion, and Defendants filed a reply. (Dkt. Nos. 18, 22, 23.)

         II. Legal Standard

         Rule 12(b)(6) of the Federal Rules of Civil Procedure permits the dismissal of an action if the complaint fails "to state a claim upon which relief can be granted."[4] Such a motion tests the legal sufficiency of the complaint and "does not resolve contests surrounding the facts, the merits of the claim, or the applicability of defenses.... Our inquiry then is limited to whether the allegations constitute 'a short and plain statement of the claim showing that the pleader is entitled to relief" Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992) (citations omitted). In a Rule 12(b)(6) motion, the Court is obligated to "assume the truth of all facts alleged in the complaint and the existence of any fact that can be proved, consistent with the complaint's allegations." E. Shore Mkts., Inc. v. J.D. Assocs. Ltd. P'ship, 213 F.3d 175, 180 (4th Cir. 2000). However, while the Court must accept the facts in a light most favorable to the non-moving party, it "need not accept as true unwarranted inferences, unreasonable conclusions, or arguments." Id.

         To survive a motion to dismiss, the complaint must state "enough facts to state a claim to relief that is plausible on its face." BellAtl. Corp. v. Twombly,550 U.S. 544, 570 (2007). Although the requirement of plausibility does not impose a probability requirement at this stage, the complaint must show more than a "sheer possibility that a defendant has acted unlawfully." Ashcroft v. Iqbal,556 U.S. 662, 678 (2009). A complaint has "facial plausibility" where the pleading "allows the court ...

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