United States District Court, D. South Carolina, Charleston Division
C. NORTON UNITED STATES DISTRICT JUDGE.
matter is before the court on plaintiff Westchester Surplus
Lines Insurance Company's (“Westchester”)
motion to partially dismiss defendant DART Shelter LLC's
(“DART”) counterclaims, ECF No. 19. For the
reasons set forth below, the court grants the motion.
declaratory judgment action arises from a state court lawsuit
filed by defendant Samantha L. Antley (“Antley”).
That lawsuit (“the underlying action”) alleges
that in September 2015, DART served Preston Yelverton
(“Yelverton”) alcohol even though he was visibly
intoxicated. Yelverton and Antley then allegedly engaged in
an altercation in which Antley was injured. As a result,
Antley filed the underlying action against DART and Yelverton
to recover for her injuries.
issued a Commercial General Liability policy to DART for a
policy period of August 10, 2015 to August 10, 2016
(“the Policy”). The Policy has limits of $1, 000,
000 per occurrence/$2, 000, 000 aggregate. In its complaint,
Westchester alleges that on December 12, 2017, Antley served
her amended complaint for the underlying action upon
DART's owner and registered agent. No. answer was filed
in the underlying action, so on February 5, 2018, the state
court in the underlying action entered an order of default
against DART and set a hearing on damages. On March 8, 2018,
allegedly unbeknownst to Westchester, DART filed a motion to
set aside the entry of default and to stay the damages
hearing. Then on March 14, 2018, DART's personal counsel
allegedly contacted Westchester to inform Westchester that
the underlying action had been filed against DART, that DART
was in default, and that DART filed a motion to set aside
default and to stay the damages hearing. According to
Westchester, this was the first time Westchester learned of
the filing of the underlying action. Westchester informed
DART that there may be coverage issues but that it would
assign counsel under a reservation of rights. Westchester
issued a reservation of rights letter on or about March 29,
2018. The state court in the underlying action denied
DART's motion to set aside default, and judgment was
entered against DART in the amount of $882, 025. DART filed
various motions to amend or seek relief from the judgment,
all of which were denied.
allegations in DART's counterclaims tell a different
version of the events at issue. DART alleges that Westchester
became aware of Antley's claim on or about November 3,
2015. DART alleges that on or about October 12, 2017, a
member of DART received a damages packet, letter of
representation, and draft complaint (“the complaint
packet”) from Antley's attorney. Then on or about
November 1, 2017, DART allegedly informed Westchester that
Antley would be making a claim against DART. Westchester
allegedly assigned a claims associate to the matter, who
emailed a member of DART on November 10, 2017 to advise that
he had “been assigned to handle the above loss for
[DART]” and to request a copy of the complaint packet.
ECF No. 11, DART Counterclaims ¶ 69. On the same day,
DART's general counsel allegedly emailed a copy of the
complaint packet to Westchester.
noted above, Antley filed her amended complaint on December
12, 2017. DART alleges that it reasonably relied on
Westchester's representation that it would “handle
the [Antley] loss” and reasonably expected Westchester
to provide defense counsel to defend DART in the underlying
action. DART Counterclaims ¶ 73. DART alleges that once
Westchester became aware of DART's default, Westchester
retained counsel under a reservation of rights. That counsel
never filed an answer on behalf of DART, but Westchester
allegedly actively attended and participated in a mediation
on July 13, 2018. Westchester did not make an offer to settle
Antley's claim at that time. DART also alleges that
before and after the damages hearing, Westchester led DART to
believe that it would pay any judgment entered against DART
but that Westchester has failed to do so despite the fact
that the judgment is within the Policy's coverage limits.
filed this declaratory judgment action seeking a declaration
that it owes no duty to defend or indemnify DART in the
underlying action. DART answered the complaint and filed
counterclaims for: (1) a declaratory judgment that
Westchester does owe a duty to defend and indemnify; (2)
breach of contract; (3) negligence, (4) bad faith; and (5) a
violation of the South Carolina Unfair Trade Practices Act
(“SCUTPA”). On October 10, 2019, Westchester
filed a motion for partial dismissal that seeks to dismiss
DART's negligence and SCUTPA counterclaims. ECF No. 19.
DART responded on October 31, 2019, ECF No. 23, and
Westchester replied on November 13, 2019, ECF No. 33. The
motion is now ripe for review.
12(b)(6) motion for failure to state a claim upon which
relief can be granted “challenges the legal sufficiency
of a complaint.” Francis v. Giacomelli, 588
F.3d 186, 192 (4th Cir. 2009) (citations omitted); see
also Republican Party of N.C. v. Martin, 980 F.2d 943,
952 (4th Cir. 1992) (“A motion to dismiss under Rule
12(b)(6) . . . does not resolve contests surrounding the
facts, the merits of a claim, or the applicability of
defenses.”). To be legally sufficient, a pleading must
contain a “short and plain statement of the claim
showing that the pleader is entitled to relief.”
Fed.R.Civ.P. 8(a)(2). A Rule 12(b)(6) motion should not be
granted unless it appears certain that the plaintiff can
prove no set of facts that would support his claim and would
entitle him to relief. Mylan Labs., Inc. v. Matkari,
7 F.3d 1130, 1134 (4th Cir. 1993). When considering a Rule
12(b)(6) motion, the court should accept all well-pleaded
allegations as true and should view the complaint in a light
most favorable to the plaintiff. Ostrzenski v.
Seigel, 177 F.3d 245, 251 (4th Cir. 1999); Mylan
Labs., Inc., 7 F.3d at 1134. “To survive a motion
to dismiss, a complaint must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief
that is plausible on its face.'” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
“A claim has facial plausibility when the plaintiff
pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged.” Id.
asks the court to dismiss DART's negligence and SCUTPA
counterclaims. In DART's response to Westchester's
motion, DART concedes that its SCUTPA counterclaim should be
dismissed. Therefore, the court dismisses DART's SCUTPA
counterclaim and only considers whether DART's negligence
counterclaim can survive.
alleges that Westchester owed DART a duty to initiate a
prompt investigation and settlement of Antley's claim and
to act in good faith in handling the claim. DART further
alleges that Westchester breached those duties by failing to
promptly investigate the claim despite timely notice,
negligently representing that it would “handle the
[Antley] loss” and otherwise defend DART, failing to
make a reasonable settlement offer during mediation, engaging
in deceptive claims handling practices, and failing to
promptly respond to Antley's claim and appoint defense
counsel. DART Counterclaims ¶ 96. Westchester argues
that DART's negligence claim must be dismissed because
Westchester had no legal duty to DART independent of the
Policy, meaning DART cannot bring a tort claim arising from
the Policy. DART disagrees, arguing that Westchester
voluntarily undertook a duty separate from the Policy when it
agreed to “handle the loss.” Therefore, the
question that arises is whether an insurance company can be
liable to its insured for negligence by voluntarily
undertaking a duty independent of its insurance policy and
subsequently breaching that duty.
state a claim for negligence, a plaintiff must allege
“(1) a duty owed to the plaintiff by the defendant, (2)
a breach of that duty by the defendant, and (3) damages
proximately resulting from the breach of duty.”
Hurst v. E. Coast Hockey League, Inc., 637 S.E.2d
560, 562 (S.C. 2006). It is within the court's province
to determine if “the law recognizes a particular
duty.” Id. If no such duty exists, then the
negligence action will fail as a matter of law. Id.
“An affirmative legal duty exists only if created by
statute, contract, relationship, status, property interest,
or some other special circumstance.” Hendricks v.
Clemson Univ., 578 S.E.2d 711, 714 (S.C. 2003).
“Ordinarily, the common law imposes no duty on a person
to act[, ]” but “[w]here ...