Anderson Oil Company Inc et al v. Varni Enterprise LLC et al

Filing 128

ORDER AND OPINION granting 108 Motion for Summary Judgment. Signed by Honorable J Michelle Childs on 6/13/2018.(asni, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
AIKEN DIVISION
Crossroads Convenience, LLC, as
successor to TFL Associates, LLC, and
assignee of Anderson Oil Company, Inc.,

)
)
)
)
Plaintiff,
)
v.
)
)
First Casualty Insurance Group, Inc.,
)
)
Defendant.
)
____________________________________)

Civil Action No.: 1:15-cv-02544-JMC

ORDER AND OPINION

Plaintiff Crossroads Convenience, LLC (“Crossroads”), as successor to TFL Associates,
LLC (“TFL”), and assignee of Anderson Oil Company, Inc. (“Anderson Oil”), filed the abovecaptioned 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.
I.

RELEVANT BACKGROUND TO PENDING MOTION

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
1

The policy for these years was numbered 4W1-61-92-11. (ECF No. 108-16.)
2

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
2

More specifically, the value of the covered property would be determined “[a]t replacement
cost without deduction for depreciation,” and “[i]f, at the time of loss,” the coverage limit
selected—$400,000.00 for 2009–2010 and 2010–2011, and $420,000.00 for 2011–2012 (see
ECF Nos. 108-8 at 11, 108-15 at 10 & 45-2 at 11)—was “80% or more of the full replacement
cost of the property immediately before the loss,” then the amount Employers Mutual paid would
be capped at the cost to replace the lost or damaged property with comparable property, or the
amount actually spent on replacing or repairing the lost or damaged property. (ECF No. 108-8 at
46.) If, however, “at the time of loss,” the coverage limit was less than 80% of the full
replacement cost of the property immediately before the loss,” then the amount Employers
Mutual paid would be the greater of the actual cash value of the lost or damaged property, or a
proportion of the cost to replace or repair the lost or damaged property, which proportion is equal
to the ratio of the coverage limit to 80% of the cost to repair or replace, but in any event would
be capped at the coverage limit. (ECF No. 108-8 at 47.)
3

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

4

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
3

The Motion as well as the Second Amended Complaint explained that Crossroads, having
recently purchased TFL, is named as Plaintiff in its capacity as TFL’s successor in interest. (See
ECF Nos. 19 at 1 & 26 at 1 ¶ 1.) The Motion along with supplemental filings also explained
that, effective May 15, 2015, Anderson Oil assigned to Crossroads any rights Anderson Oil may
have against First Casualty arising in connection with the insurance policy, including the rights
Anderson Oil had been assigned by Varni, in exchange for Crossroads’ agreement not to execute
any judgment against Anderson Oil arising from the pending litigation. (See ECF Nos. 19 at 1,
20 & 26 at 7 ¶¶ 22–24.) Accordingly, as the Motion explains, the Second Amended Complaint
names Crossroads as Plaintiff not only in its capacity as TFL’s successor in interest but also in its
capacity as assignee of Varni’s and Anderson Oil’s rights. (See ECF No. 19 at 1; ECF No. 26 at
8 ¶ 29.)
4
The seven original claims are for breach of contract, negligence, negligent misrepresentation,
promissory estoppel, constructive fraud, breach of fiduciary duties and equitable indemnity.
(ECF No. 26 at 7 ¶ 25–8 ¶ 29 & 10 ¶ 34–18 ¶ 70.) To a large extent, many of the amendments
are non-substantive and only reflect Crossroads’ status as the sole Plaintiff in the capacities as
TFL’s successor in interest and Varni’s and Anderson Oil’s assignee and Varni’s deletion as
Defendant. Beyond that, the Second Amended Complaint adds paragraphs alleging that First
Casualty knew that TFL and Anderson Oil were third-party beneficiaries of Varni’s and First
Casualty’s contract to procure an insurance policy and that Anderson Oil was expected to assign
its interests in the litigation to Crossroads. (ECF No. 26 at 5–6 ¶ 17 & 7 ¶ 24.) Although the
5

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)
Second Amended Complaint contains the same seven causes of action against First Casualty that
were asserted in prior versions of the Complaint, the Second Amended Complaint drops the
“equitable subrogee” language and, instead, simply asserts First Casualty is liable to Crossroads
based on Crossroads’ status as TFL’s successor in interest and as Varni’s and Anderson Oil’s
assignee. (See id. at 7 ¶ 25–8 ¶ 29, 10 ¶ 34–18 ¶ 75.) For each of the seven causes of action,
Crossroads alleges that First Casualty was liable to Varni and, for this reason, First Casualty is
also liable to Crossroads, either because Varni is ultimately liable to Crossroads (see id. at 7 ¶ 22
([First Casualty] refused . . . to compensate Varni for the amount of coverage that [First
Casualty] should have procured for Varni. As a result, Varni is now liable to Anderson Oil,
wh[ich] is in turn liable to [Crossroads] as TFL’s successor . . . .”)) or because Varni ultimately
assigned its rights against First Casualty to Crossroads (see id. at 8 ¶ 29, 11 ¶ 39, 13 ¶ 49, 14 ¶
54, 15 ¶ 59, 16 ¶ 63 & 18 ¶ 70). In addition, for all but the breach of contract cause of action,
Crossroads alleges in the Second Amended Complaint that First Casualty is directly liable to
Anderson Oil and, for this reason as well, is liable to Crossroads, either because Anderson Oil is
ultimately liable to Crossroads or because Anderson Oil assigned its rights to Crossroads. (See
id. at 10 ¶ 34–18 ¶ 75.)
5
Employers Mutual, which had continued to be named as Defendant in the Second Amended
Complaint (see ECF No. 26 at 1), filed a separate Motion for Summary Judgment (ECF No. 54)
on March 23, 2016. However, the parties later stipulated to Employers Mutual’s dismissal from
this action thereby resolving Employers Mutual’s Motion for Summary Judgment. (See ECF No.
61.)
6

(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.)
II.

JURISDICTION

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 it6 and First
Casualty and Employers Mutual, who are allegedly both citizens of a state other than South
6

Crossroads is a corporation organized under the laws of South Carolina with its principal place
of business in South Carolina. (ECF No. 26 at 1 ¶ 1.) Crossroads’ is the successor to TFL, a
South Carolina corporation, and the assignee of Anderson Oil, another South Carolina
corporation. (Id. ¶ 2 & at 2 ¶ 3.)
7

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.)
III.

LEGAL STANDARD

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, 12324 (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 evidence
supporting the claimed factual dispute be shown to require a jury or judge to resolve the parties’
differing versions of the truth at trial.” Anderson, 477 U.S. at 249.

8

IV.
A.

ANALYSIS

The Parties’ Arguments
1. First Casualty
In its Motion, First Casualty generally argues that all of Crossroads’ causes of action

depend on the existence of a duty to advise “as to what limits of coverage to purchase.” (ECF
No. 108 at 8.) First Casualty further argues it is entitled to summary judgment because such a
duty does exist under South Carolina law. (Id. at 9 (citing Houck v. State Farm Fire & Cas. Ins.
Co., 620 S.E.2d 326, 329 (S.C. 2005) (“Absent an express undertaking to assume [] a duty [to
advise an insured at the point of application], a duty can be impliedly created [] [based on]
whether: (1) the agent received consideration beyond a mere payment of the premium, (2) the
insured made a clear request for advice, or (3) there is a course of dealing over an extended
period of time which would put an objectively reasonable insurance agent on notice that his
advice is being sought and relied on.”) (citation omitted)).) In this regard, First Casualty asserts
that it is entitled to summary judgment because (1) it did not breach its only duty “to procure the
coverage requested by the customer” and (2) the record is devoid of evidence that it took on the
additional duty of advising the “insured as to the scope of coverage, the limits of coverage, the
availability or advisability of different types of coverage, or any other matters relating to
insurance coverage.” (ECF No. 108 at 1–2.)
In addition to the foregoing, First Casualty argues that each cause of action alleged by
Crossroads specifically fails warranting the grant of summary judgment. First, First Casualty
reiterates that without a duty to advise, which does not exist under South Carolina law,
Crossroads cannot demonstrate the necessary prerequisite for its breach of contract and
negligence for breach of the duty to advise claims. (Id. at 12–13.) First Casualty next asserts

9

that the record is devoid of evidence demonstrating any false representations to Varni and its
reliance on such misrepresentations to support either a negligent misrepresentation claim or a
fraud claim. (Id. at 14, 15.) First Casualty further asserts that the promissory estoppel claim
fails because there is no evidence that it “unambiguously warranted and promised Anderson Oil
and Varni that [] [First Casualty] would procure, and [] [Employers Mutual] would provide,
insurance coverage in an amount that would adequately protect Anderson Oil’s and Varni’s
interests.” (Id. at 14 (referencing ECF No. 26 at 13 ¶ 51).) First Casualty then submits that a
breach of fiduciary duty claim is unsustainable because under South Carolina law, “an insurance
agent does not stand in a fiduciary relationship with his customer.” (Id. at 15 (citing Pitts v.
Jackson Nat’l Life Ins. Co., 574 S.E.2d 502, 509 (S.C. Ct. App. 2002) (“[T]he sale of insurance
is an arm’s length commercial transaction, which does not give rise to a fiduciary
relationship.”)).) Finally, as to equitable indemnity, First Casualty asserts that the claim fails
because Crossroads cannot show that either Varni or Anderson Oil as indemnitees are without
fault for the loss. (Id. at 16 (citing Walterboro Cmty. Hosp., Inc. v. Meacher, 709 S.E.2d 71, 74
(S.C. Ct. App. 2011) (“[A] plaintiff asserting an equitable indemnification cause of action may
recover damages if he proves: . . . (2) the indemnitee was exonerated from any liability for those
damages; . . . .”)).)
2. Crossroads
Crossroads opposes the instant Motion for Summary Judgment arguing that First
Casualty should be judicially estopped from claiming that it did not have any duty to advise
because this argument was made in its First Motion for Summary Judgment. (ECF No. 110 at 2.)
Additionally, Crossroads argues that because it has presented evidence that First Casualty’s
agent undertook to advise Varni’s agent, there are genuine issues of material fact regarding

10

whether First Casualty “explicitly undertook to advise Varni.”7 (Id. at 6–9.)
B.

The Court’s Review
1. Judicial Estoppel
Crossroads asserts that judicial estoppel bars First Casualty from asserting that it did not

have a duty to advise. (ECF No. 110 at 1–2.) The doctrine of judicial estoppel precludes a party
from adopting a position that is in conflict with a position taken in the same or related litigation.
Hayne Fed. Credit Union v. Bailey, 489 S.E.2d 472, 477 (S.C. 1997). The doctrine generally
applies to statements of fact, and not inconsistent legal positions. Id. The purpose of the
doctrine is to protect the integrity of the judicial process. Id. In order to determine whether
judicial estoppel applies in a given case, courts look to three factors. “First the party sought to be
estopped must be seeking to adopt a position that is inconsistent with a stance taken in prior
litigation.” Lowery v. Stovall, 92 F.3d 219, 224 (4th Cir. 1996). “Second, the prior inconsistent
position must have been accepted by the court.” Id. “Finally, the party sought to be estopped
must have intentionally misled the court to gain unfair advantage.” Id. (internal quotations and
citations omitted).
In support of its position, Crossroads generally contends that First Casualty “previously
argued that it complied with a duty [to] provide sufficient insurance to Plaintiffs.” (ECF No. 110
at 2.)

However, Crossroads failed to provide any further argument regarding how the

aforementioned factors are satisfied thus requiring application of judicial estoppel. Accordingly,
the court does not find that First Casualty should be judicially estopped from asserting its
arguments in the instant Motion regarding the duty to advise.
7

The court observes that this point is the main thrust of Crossroads’ opposition brief. (See ECF
No. 110 at 6–9.) The evidence submitted in support of this point came expressly from the
deposition testimony of First Casualty’s agent, Kunce, and Crossroads’ expert, Franklin Cannon.
(See ECF Nos. 110-1 & 110-2.)
11

2. Claims with a Duty of Care as an Element
In its Motion, First Casualty primarily argues that the claims in the Second Amended
Complaint fail because an insurer does not owe any duty to advise an insured under South
Carolina law. In considering the merits of this argument, the most apparent issue with this
position is that not all of Crossroads’ claims have a duty of care as an element of the cause of
action. Therefore, consistent with the foregoing observation, the court finds it appropriate to
separate the claims in which a duty of care is an element from the claims in which a duty of care
is not an element.
Crossroads’ claims that have a duty of care as an element are negligence,8 negligent
misrepresentation,9 and breach of fiduciary duty.10 In opposing First Casualty’s argument that
these claims fail because an insurer does not have a duty to advise, Crossroads relies completely
on testimony from its expert, Franklin Cannon, who opined that all insurance agents “have a duty
to [] insureds to evaluate risk and to counsel them on proper coverage” and that “Kunce [actions]
fell short of underwriting standards.” (ECF No. 110-2 at 101:9–19 & 108:2–6.)
8

To assert direct liability based on a negligence claim in South Carolina, a plaintiff must show
that (1) defendant owed her a duty of care; (2) defendant breached this duty by a negligent act or
omission; (3) defendant’s breach was the proximate cause of her injuries; and (4) she suffered
injury or damages. Dorrell v. S.C. DOT, 605 S.E.2d 12, 15 (S.C. 2004) (citation omitted).
“Whether the law recognizes a particular duty is an issue of law to be determined by the court.”
Jackson v. Swordfish Inv., L.L.C., 620 S.E.2d 54, 56 (S.C. 2005) (citation omitted).
9
To establish liability for negligent misrepresentation, a plaintiff must show (1) the defendant
made a false representation to the plaintiff; (2) the defendant had a pecuniary interest in making
the representation; (3) the defendant owed a duty of care to see that he communicated truthful
information to the plaintiff; (4) the defendant breached that duty by failing to exercise due care;
(5) the plaintiff justifiably relied on the representation; and (6) the plaintiff suffered a pecuniary
loss as the proximate result of his reliance upon the representation. AMA Mgmt. Corp. v.
Strasburger, 420 S.E.2d 868, 874 (S.C. Ct. App. 1992).
10
“To establish a claim for breach of fiduciary duty, the plaintiff must prove (1) the existence of
a fiduciary duty, (2) a breach of that duty owed to the plaintiff by the defendant, and (3) damages
proximately resulting from the wrongful conduct of the defendant.” RFT Mgmt. Co., LLC v.
Tinsley & Adams LLP, 732 S.E.2d 166, 173 (S.C. 2012) (citing Moore v. Moore, 599 S.E.2d 467
(S.C. Ct. App. 2004) (discussing the elements comprising a breach of fiduciary duty claim)).
12

Upon review, the court observes that “as a general rule, an insurance agent has no duty to
advise an insured at the point of application, absent an express or implied undertaking to do so.”
Houck v. State Farm Fire & Cas. Ins. Co., 620 S.E.2d 326, 329 (S.C. 2005). However, “[a]n
implied undertaking may be shown if: (1) the agent received consideration beyond a mere
payment of the premium, []; (2) the insured made a clear request for advice, []; or (3) there is a
course of dealing over an extended period of time which would put an objectively reasonable
insurance agent on notice that his advice is being sought and relied on.” Trotter v. State Farm
Mut. Auto. Ins. Co., 377 S.E.2d 343, 347 (S.C. Ct. App. 1988) (internal and external citations
omitted). If an insurer undertakes to advise the insured, the “insurance agent or broker must
exercise good faith, reasonable skill, care, and diligence.” Sullivan Co., Inc. v. New Swirl, Inc.,
437 S.E.2d 30, 31 (S.C. 1993). “If, because of his fault or neglect, the agent fails to procure
insurance, or does not follow instructions, or the policy issued is void, or materially deficient, or
does not provide the coverage he undertook to supply, the agent is liable to his principal.” Id.
“It is the insured [] who bears the burden of proving the undertaking.” Trotter, 377 S.E.2d at
347.
In consideration of the aforementioned caselaw, Crossroads’ evidence fails to
demonstrate that First Casualty either expressly or impliedly undertook to advise Varni resulting
in a duty of care. First, Crossroads failed to submit either argument or caselaw to support a
finding that Kunce’s attempt to explain co-insurance to Varni’s principal, P.J. Patel, operates as
an express agreement by First Casualty to perform advisory services. Second, there is no
evidence in the record showing that First Casualty was on notice that its advice regarding
coverage was being sought and would be relied on. In this regard, P.J. Patel declared that he
could not recall either (1) providing “First Casualty with a copy of the lease between Varni and

13

Anderson Oil before the loss in October 2011” or (2) engaging in “any further specific
substantive communications between me (or any representatives of Varni) and any
representatives of First Casualty.” (ECF No. 108-1 at 2–3 ¶ 5.) Moreover, the opinion of
Crossroads’ expert, Franklin Cannon, “is insufficient in and of itself to create such a duty.”
Estate of Anderson by Brown v Nat’l Union Fire Ins. Co. of Pittsburgh, Pa., Civil Action No.:
3:17-00032-MGL, 2018 WL 1428497, at *5 (D.S.C. Mar. 22, 2018) (citing Trotter, 377 S.E.2d
at 351 (holding in an insurance case “opinion testimony [that insurance agent had a duty to
explain risks, coverage, and policy exclusions to the insured] could not create a duty to advise,
which does not exist at law.”)). Therefore, in this case, the court finds that Crossroads is unable
to create a genuine dispute of material fact regarding whether First Casualty owed Varni a duty
to advise. Accordingly, because Crossroads cannot prove an essential element of its claims for
negligence, negligent misrepresentation and breach of fiduciary duty, First Casualty is entitled to
summary judgment on these causes of action.
3. Claims without Duty of Care as an Element
The remaining claims in this action for breach of contract,11 promissory estoppel,12
constructive fraud13 and equitable indemnity14 do not have a duty of care as an element of the
11

“To recover for a breach of contract, the plaintiff must prove: (1) a binding contract entered
into by the parties; (2) a breach or unjustifiable failure to perform the contract; and (3) damage
suffered by the plaintiff as a direct and proximate result of the breach.” Tomlinson v. Mixon, 626
S.E.2d 43, 49 (S.C. 2006).
12
The elements of promissory estoppel are: (1) the presence of a promise unambiguous in its
terms; (2) reasonable reliance upon the promise by the party to whom the promise is made; (3)
the reliance is expected and foreseeable by the party who makes the promise; and (4) the party to
whom the promise is made must sustain injury in reliance on the promise. Woods v. State, 431
S.E.2d 260, 263 (S.C. Ct. App. 1993) (citation omitted).
13
To establish constructive fraud all elements of actual fraud except the element of intent must be
established. O’Quinn v. Beach Assocs., 249 S.E.2d 734, 738 (S.C. 1978). Under South Carolina
law, the elements of a cause of action for “fraud and deceit, based upon misrepresentation”
include “(1) a representation; (2) its falsity; (3) its materiality; (4) either knowledge of its falsity
or a reckless disregard of its truth or falsity; (5) intent that the representation be acted upon; (6)
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causes of action. However, despite not having a duty of care as an element, each of these claims
fails as a matter of law.
In support of its claims for breach of contract and promissory estoppel, Crossroads
alleged in the Second Amended Complaint that First Casualty respectively contracted and/or
promised to provide insurance coverage that would adequately cover the needs of Varni and
Anderson Oil. (ECF No. 26 at 8 ¶¶ 26, 27 & 13 ¶ 51.) However, other than the allegations of
the Second Amended Complaint, there is nothing in the record that demonstrates (1) the binding
contract at issue, (2) the provision allegedly breached or (3) the unambiguous promise by First
Casualty as it relates to the procurement of insurance. As a general matter, a plaintiff cannot
defeat summary judgment by relying on “mere speculation.” Felty v. Graves–Humphreys Co.,
818 F.2d 1126, 1128 (4th Cir. 1987). Accordingly, First Casualty is entitled to summary
judgment on Crossroads claims for breach of contract and promissory estoppel.
As to its claim for constructive fraud, Crossroads’ allegations reference an alleged breach
of the duty of good faith and fair dealing. (See ECF No. 26 at 14 ¶ 56–15 ¶ 57.) Even though
the court agrees that the duty of good faith and fair dealing can apply to contracts for insurance,
see, e.g., Carolina Bank & Tr. Co. v. St. Paul Fire & Marine Co., 310 S.E.2d 163, 165 (S.C. Ct.
App. 1983), it is not clear how an alleged breach of the duty of good faith and fair dealing

the hearer's ignorance of its falsity; (7) the hearer’s reliance on its truth; (8) the hearer’s right to
rely thereon; (9) the hearer’s consequent and proximate injury.” Fisher v. Pelstring, 817 F.
Supp. 2d 791, 823 (D.S.C. 2011) (quoting M.B. Kahn Constr. Co. v. S.C. Nat’l Bank of
Charleston, 271 S.E.2d 414, 415 (S.C. 1980)).
14
“A party seeking to recover under a theory of equitable indemnification must prove: ‘(1) the
indemnitor is liable for causing plaintiff’s damages; (2) the indemnitee was exonerated from any
liability for those damages; and (3) the indemnitee suffered damages as a result of plaintiff’s
claims against it which were eventually proven to be the fault of the indemnitor.’” Owens v.
Hertz Equip. Rental Corp., C.A. No. 6:09-cv-01534-JMC, 2010 WL 11534155, at *2 (D.S.C.
Oct. 27, 2010) (quoting Vermeer Carolina’s Inc. v. Wood/Chuck Chipper Corp., 518 S.E.2d 301,
307 (S.C. Ct. App. 1999)).
15

satisfies the elements of a constructive fraud claim.15 In this regard, Crossroads fails to suggest
what evidence, if any, in the record supports its claim for constructive fraud. Therefore, the
court grants First Casualty’s Motion for Summary Judgment as to this claim.
In its final remaining claim for equitable indemnity, Crossroads asserts that First
Casualty’s actions made Varni and Anderson Oil liable to Crossroads for damages. (ECF No. 26
at 17 ¶ 65–18 ¶ 70.) “Indemnity is that form of compensation in which a first party is liable to
pay a second party for a loss or damage the second party incurs to a third party.” Vermeer, 518
S.E.2d at 305 (citation omitted). “Ordinarily, if one person is compelled to pay damages because
of negligence imputed to him as the result of a tort committed by another, he may maintain an
action over for indemnity against the person whose wrong has thus been imputed to him.” Id.
(citation omitted). “This is subject to the proviso that no personal negligence of his own has
joined in causing the injury.” Id. (citation omitted). “A party opposing a summary judgment
motion on an indemnification claim, even though the motion is based primarily upon the
complaint, has the two-fold burden of demonstrating a genuine issue of material fact regarding
the opposing party’s lack of liability and a genuine issue of material fact regarding the moving
party's liability.” Id. at 307 (citations omitted).
Upon consideration of the evidence submitted by the parties, the court agrees with First
Casualty that the evidence of record– when viewed in the light most favorable to Crossroads as
the nonmoving party–demonstrates without dispute that Varni, through its principal P.J. Patel,
has not been exonerated from being at fault in causing its own damages and those suffered by
15

“Under South Carolina law, ‘there exists in every contract an implied covenant of good faith
and fair dealing.’” Creamer v. Anderson Cty. Sheriff’s Office, C/A No. 8:13-cv-03405-JMC,
2014 WL 3889118, at *4 (D.S.C. Aug. 7, 2014) (quoting Williams v. Riedman, 529 S.E.2d 28, 36
(S.C. 2000)). However, “the implied covenant of good faith and fair dealing is not an
independent cause of action separate from the claim for a breach of contract.” Id. (quoting
RoTec Servs., Inc. v. Encompass Servs., Inc., 597 S.E.2d 881, 884 (S.C. Ct. App. 2004)).
16

Anderson Oil as it relates to the procurement of insurance coverage on the premises. Because of
this evidence, First Casualty is entitled to summary judgment on Crossroads’ cause of action for
equitable indemnity.
V.

CONCLUSION

Upon careful consideration of the entire record and the parties’ arguments, the court
hereby GRANTS First Casualty Insurance Group, Inc.’s Motion for Summary Judgment. (ECF
No. 108.)
IT IS SO ORDERED.

United States District Judge
June 13, 2018
Columbia, South Carolina

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