United States District Court, D. South Carolina, Florence Division
Perry Phillip McElveen, as assignee of Johnny Joe Jones, Plaintiff,
The Cincinnati Insurance Company, Defendant.
Bryan Harwell Chief United States District Judge.
matter before this Court is a breach of contract and bad
faith action based on an alleged refusal by an insurance
company to defend an insured in an underlying lawsuit. In the
underlying lawsuit, Plaintiff Perry Phillip McElveen
(“McElveen”) sued several defendants for injuries
he sustained in an automobile collision that occurred on
March 16, 2016 that he alleged was caused by Johnny Joe Jones
(“Jones”). At the time of the collision, Jones
was driving an automobile that had been recently repossessed
by American Acceptance Corporation. American Acceptance
Corporation (“American Acceptance”) sent the
automobile to Jones so that he could detail the car prior to
its sale at auction. American Acceptance Corporation is the
named insured of a policy provided by The Cincinnati
Insurance Company, which was in effect at the time of the
collision. [ECF No. 1-1, ¶¶ 5-7]. In the underlying
lawsuit, Jones never filed an answer or responsive pleading.
McElveen obtained a sizeable judgment against Jones after
default was entered. Thereafter, on July 17, 2019, Plaintiff
Perry Phillip McElveen, as assignee of Johnny Joe Jones,
filed a complaint in the State Court of Common Pleas of Horry
County, alleging breach of contract and bad faith against
Defendant The Cincinnati Insurance Company
(“Cincinnati”). [ECF No. 1-1]. He alleges that
Cincinnati never tendered a defense on behalf of Johnny Joe
Jones in the underlying lawsuit seeking damages for
Jones's negligence. [ECF No. 1-1, ¶¶ 21-24].
August 12, 2019, Cincinnati removed this case to federal
court. [ECF No. 1]. Cincinnati then filed a Motion to Dismiss
the Complaint, pursuant to Federal Rules of Civil Procedures
12(b)(1) and 12(b)(6). [ECF No. 4]. Cincinnati argues that
the Complaint should be dismissed because the alleged
assignor was not a party to the policy of insurance issued by
Cincinnati to American Acceptance, and neither Jones nor the
automobile are covered under the policy. Therefore,
Cincinnati argues that McElveen fails to state a claim for
relief in his Complaint. On September 3, 2019, Plaintiff
filed a response in opposition to the Motion [ECF No. 8], and
Defendant filed its reply on September 9, 2019. [ECF No. 9].
This matter is now before the Court for review.
Policy of Insurance
issued a policy of business automobile coverage to American
Acceptance, Number FIA 141 76 57, with an effective date of
November 1, 2014 (the “Policy”). The Policy
contains the following provision:
“[w]e will pay all sums an “insured”
legally must pay as damages because of ‘bodily
injury' or ‘property damage' to which this
insurance applies, caused by an ‘accident' and
resulting from the ownership, maintenance or use of a covered
[ECF #4-2, p. 6].[2" name="FN2" id=
"FN2">2] As alleged in the Complaint, the Policy
defines “insured” as follows:
1. Who is an insured The following are
a. You for any covered “auto.”
b. Anyone else while using with your permission a covered
“auto” you own, hire or borrow except . . .
(3) Someone using a covered “auto” while he or
she is working in a business of selling, servicing,
repairing, parking, or storing “autos” unless
that business is yours.
c. Anyone liable for the conduct of an “insured”
described above but only to the extent of that liability.
[ECF #4-2, p. 6]. The Policy contains an endorsement titled
“Repossessed Auto.” The endorsement contemplates
coverage for approximately sixty repossessed automobiles, and
contains the following:
A. Any “auto” you repossess is a covered