Urena v. Nationwide Mutual Insurance Company
FINDINGS OF FACT AND CONCLUSIONS OF LAW Signed by Honorable David C Norton on 7/30/2015. (cahe, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
EMILIO J. URENA, as assignee of
Gregory S. Bryant,
COMPANY OF AMERICA,
This matter is before the court following a bench trial held on July 20, 2015.
Based on the evidence presented and heard on that date, the court makes the following
findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure 52.
I. FINDINGS OF FACT
On January 22, 2012, a car driven by Gregory Bryant (“Bryant”) struck a
car driven by plaintiff Emilio J. Urena (“Urena”) in Moncks Corner, S.C. Urena
sustained severe injuries as a result of the accident and was airlifted to the hospital.
At the time of the accident, Bryant was an insured under an insurance
policy issued by defendant Nationwide Insurance Company of America (“Nationwide”).
The policy provided liability coverage in the amounts of $25,000 per person for bodily
injury and $25,000 for property damage. Following the accident, Urena filed a claim
The claim was initially assigned to Nationwide claims adjustor Destiny
Goodrum (“Goodrum”). In her notes, Goodrum indicated that Urena was hospitalized
with severe injuries. On January 27, 2012, Goodrum received a letter of representation
from Urena’s counsel and the bodily injury claim was transferred to adjustor Tina
Ramsey (“Ramsey”) of Nationwide’s attorney negotiation team. Upon being assigned
the claim, Ramsey reviewed Goodrum’s notes in the claim file. Ramsey sent a letter to
Bryant the day the case was assigned to her, informing him that there was a potential for
After the claim was assigned to her, Ramsey began to investigate the
claim. Ramsey made a note in the claim file on February 7, 2012 indicating that
[b]ased on the fact that liability is clear, [insured driver] apparently
travelling at an excessively high rate of speed and dui, our limits, both
[property damage] and [bodily injury] coverage, will be exhausted. Fotos
of both vehicle show significant damage. [Insured vehicle] flipped over
and [claimant vehicle’s] rear end is completely missing.
Pl.’s Ex. 7. Ramsey indicated at trial that, as of February 7, 2012, she knew that liability
was clear and that the policy limits would be exhausted. Dwayne Singleton
(“Singleton”), Ramsey’s supervisor, sent an email to Ramsey the same day stating that he
agreed that “this [is] likely a limits case and can be settled once the package is in.” Pl.’s
In a February 15, 2012 note, Ramsey indicated that she was waiting for
Urena’s counsel to email her photos so that she could evaluate the bodily injury claim.
Ramsey noted that “[w]hat is known is that clmt was significantly injured and
hospitalized for several weeks. This is a significant punitive claim and our limits will be
exhausted. Will try to call hospital and locate bill, but if unsuccessful, will move forward
with the evaluation and resolution of this claim.” Pl.’s Ex. 5. On the afternoon of
February 15, 2012, Urena’s counsel emailed Ramsey photos of Urena in the hospital and
both of the vehicles involved in the accident. On February 16, 2012, Ramsey evaluated
the claim at $109,000 with medical expenses of at least $59,000.
On February 16, 2012, Urena’s counsel faxed a letter to Larry Epperly
(“Epperly”), a Nationwide claims adjustor who was handling Urena’s property damage
claim.1 Epperly alerted Ramsey to the letter around 3:00 p.m. the same day. The letter
contained the following time-limit demand: “[I]f we have not received the settlement
checks by the close of business tomorrow, or the funds are not wired directly to my trust
account, I will advise my client to reject any forthcoming receipt of the policy limits as
being untimely.” Pl.’s Ex. 1. Epperly and Ramsey discussed the letter but did not
discuss the time-limit demand.
Ramsey admitted that due to her own error, she did not read the paragraph
containing the time demand. She also indicated that if she had read the letter more
closely, she would have complied with the demand. She testified that she had previously
sent a check via overnight mail to comply with a time-limit demand and that she could
have sent a check via overnight mail to Urena’s counsel. Moreover, Ramsey testified that
Nationwide had agents in the Charleston area at that time who could have delivered a
check in order to comply with the demand, although she was not sure that they were
working on February 17, 2012.
Ramsey obtained approval to pay the bodily injury policy limits and
issued a check on February 17, 2012. She mailed the check to Urena’s counsel the same
day and included both a covenant not to execute and Medicare addendum with the check.
Because the following Monday, February 20, 2012, was a federal holiday, Urena’s
counsel received the check on February 21, 2012. The same day, Urena’s counsel
While the letter indicated that it had also been faxed to Ramsey, the fax number
to which it was sent was not Ramsey’s.
returned the check because it had not been timely received as required by his demand
After returning the check, Urena filed a lawsuit against Bryant in this
court. On December 12, 2013, the jury returned a verdict for Urena in the amount of
Bryant assigned his claim against Nationwide to Urena. The court left the
record open to further submissions from counsel on the issue of the assignment. Because
the court has not received anything further, it assumes that the assignment to Urena was
II. CONCLUSIONS OF LAW
This court has jurisdiction over this matter pursuant to 28 U.S.C. §
1332(a)(1). A federal court sitting in diversity is required to apply to substantive law of
the forum state. Erie R.R. Co. v. Tompkins, 304 U.S. 64, 79 (1938). Therefore, South
In the seminal case of Tyger River Pine Co. v. Md. Cas. Co., the South
Carolina Supreme Court held that “an insurer against liability for accidents which
assumes the duty of defending a claim owes the assured the duty of settling the claim if
that is the reasonable thing to do.” 170 S.E. 346, 349 (S.C. 1933). The court said the
following in answering whether a plaintiff is entitled to recover for negligence
unaccompanied by bad faith in the negotiations:
We think this question was decided by this court by the opinion on the
appeal from the order overruling the demurrer. The opinion thus states the
issue: “Does the complaint state a cause of action either in contract or in
tort for breach of contract, or of bad faith or negligence [emphasis added]
in the performance of contract?”
The following was quoted from the case of Attleboro Mfg. Co. v.
Frankfort, etc., Co. (C. C. Mass.) 171 F. 495: “Where an insurer under an
employers’ liability policy on being notified of an action for injuries to
insured’s servant assumed the defense thereof, and was negligent in
conducting the suit, to the loss of the employer, the latter was entitled to
sue the insurance company for breach of its implied contract to exercise
reasonable care in conducting the suit or in tort for negligence.”
We said in our opinion in connection with this question: “The same
principle is announced in the rehearing of the same case reported in
[Attleboro Mfg. Co. v. Frankfort, etc., Co.] (C. C. A.) 240 F. 573. And
such we find to be the prevailing opinion.”
Tyger River, 170 S.E. at 348 (emphasis added). The South Carolina Supreme Court has
further held that in disposing of a Tyger River claim, the factfinder “is entitled to
consider negligence on the issue of unreasonable refusal to pay benefits.” Nichols v.
State Farm Mut. Auto. Ins. Co., 306 S.E.2d 616, 620 (S.C. 1983).
“[T]he covenant of good faith and fair dealing extends not just to the
payment of a legitimate claim, but also to the manner in which it is processed.
Mixson, Inc. v. Am. Loyalty Ins. Co., 562 S.E.2d 659, 662 (S.C. Ct. App. 2002). “‘[I]f
an insured can demonstrate bad faith or unreasonable action by the insurer in processing a
claim under their mutually binding insurance contract, he can recover consequential
damages in a tort action.’” Tadlock Painting Co. v. Md. Cas. Co., 473 S.E.2d 52, 53
(S.C. 1996) (quoting Nichols, 306 S.E.2d 619) (emphasis in Tadlock). “[I]f the insurance
company did not specifically deny the claim”, whether they are liable under Tyger River
must be judged “by the evidence it had before it at the time the suit was filed.” Howard
v. State Farm Mut. Auto. Ins. Co., 450 S.E.2d 582, 584 (S.C. 1994).
The court finds that under the unique circumstances of this case—Ramsey
received a demand letter, did not read the actual demand, and failed to send the checks to
Urena’s counsel in a timely manner, even though she could have and would have sent the
checks as requested if she had read the demand—Nationwide’s conduct constitutes
negligence in processing a claim. Nationwide breached its duty to Bryant and did not
adhere to the standard of care—testified to by Urena’s expert, Marvin Infinger—by
failing to read the demand letter carefully and failing to process the claim in a timely
manner. But for that breach, Bryant would not have been subjected to a substantial
verdict over the policy limits. The damages were foreseeable, evidenced by Ramsey’s
testimony that she knew of the potential that Bryant could be exposed to a large judgment
if Nationwide did not settle within policy limits.
Nationwide’s expert, Dawes Cook, testified that had Ramsey read the
letter and had it in her capacity to get the check to Urena’s counsel by Friday afternoon,
prudence would dictate that she do it and it would be unreasonable to Bryant not to do it
unless she had some reason why she could not do it. Moreover, Singleton testified that if
it were possible and reasonable to meet a time demand, Ramsey would be required to do
so. Ramsey testified that there was no reason she could not have paid the claim in
compliance with the demand letter.
The court finds it irrelevant that Ramsey included a covenant not to
execute with the check she sent to Urena’s counsel. The rejection letter indicates that the
settlement was not accepted because it fell outside of the time-demand. Whether
Nationwide would have acted reasonably in refusing to settle without a covenant not to
execute—assuming their offer was timely and Urena rejected the settlement offer on that
basis—is simply not before the court. Urena’s demand letter made it clear that he would
not accept a settlement offer after close of business on February 17, 2012 and he did not
receive one by that deadline.
The court finds that Ramsey’s conduct did not rise to a reckless or
conscious disregard for Bryant’s rights. Therefore punitive damages are not appropriate.
Based on the foregoing, the court FINDS AND CONCLUDES that Nationwide
is liable to Urena in the amount of $1,100,000.00—the difference between the coverage
provided and the amount of the judgment entered against Bryant.
AND IT IS SO ORDERED.
DAVID C. NORTON
UNITED STATES DISTRICT JUDGE
July 30, 2015
Charleston, South Carolina
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