Henry v. Government Employees Insurance Company et al
ORDER AND OPINION granting 40 Defendant's Motion for Summary Judgment; denying 41 Plaintiff's Motion to Certify Questions Signed by Honorable Richard M Gergel on 8/3/2017.(sshe, )
IN THE UNITED ST ATES DISTRICT COURT
DISTRICT OF SOUTH CAROLINA
Government Employees Insurance
Civil Action No. 2:15-cv-3560-RMG
ORDER AND OPINION
This matter is before the Court on Defendant Government Employees Insurance
Company's ("GEICO") Motion for Summary Judgment and Plaintiff David Henry' s Motion to
Certify Questions. (Dkt. Nos. 40, 41.) For the reasons set forth below, Defendant's Motion for
Summary Judgment is granted, and Plaintiffs Motion to Certify Questions is denied.
A. The Accident
On September 3, 2011 , Plaintiff David Henry was an employee of Aaron's, Inc. and a
passenger in an Aaron' s truck when the truck was rear-ended by a vehicle operated by Sam
Knowlin, an underinsured motorist. (Dkt. No. 40-1 at 4.) Henry sustained injuries, and his
medical bills totaled $10,617.71. (Dkt. No. 40-7 at 10.) Henry's physician gave him a note a little
over a month after the accident allowing him to return to work without accommodations. (Dkt.
Nos. 40-4 at 6, 40-5 .) GEICO insured both the at-fault driver, Knowlin, and David Henry.
B. The Insurance Policy
Prior to the accident, on May 14, 2011 , GEICO had issued an insurance policy (the
"Policy") to Jonnie Ruth Lawson of Aaron ' s, Inc. , that provided liability, uninsured, and
underinsured motorist ("UIM") coverage. (Dkt. No. 40-2 at 2.) The UIM portion of the Policy
states that GEICO "will pay damages for bodily injury and property damage caused by an
accident which the insured is legally entitled to recover from the owner or operator of an
underinsured motor vehicle." (Id. at 5.) Under the Policy, GEICO maintains the right to
participate in and to defend any UIM claim. (Id. at 6.) The coverage limit for UIM claims is
$25,000 and includes a standard offset provision under which any amount the insured would be
entitled to recover "from the owner or operator of an underinsured motor vehicle because of
bodily injury or property damage caused by an accident" is reduced by any sums already
recovered from several other sources, including workers' compensation and amounts recovered
from claims against legally responsible persons. (Id. at 2, 6, 7.)
C. Henry Recovers $50,395.61 Through his Workers' Compensation and
Liability Claims and Proceeds to Seek UIM Benefits Under the Policy
On February 2, 2013, Henry's workers' compensation carrier paid him $25,395.61 m
benefits. (Dkt. No. 40-7 at 5-8.) On September 16, 2013, Henry filed a lawsuit against Sam
Knowlin, the at-fault driver. That action proceeded to mediation at which Henry executed a
Covenant Not to Execute in exchange for receiving $25,000 on his liability claim. (Dkt. No. 406.) On December 10, 2014, after settling the liability portion of his claim against Knowlin, Henry
served GEICO as the UIM carrier, seeking the $25,000 in UIM coverage. GEICO stepped in to
defend the action.
D. The Parties Cannot Agree on a Settlement and Proceed to Trial
The parties could not agree about whether Henry's damages were sufficient to reach the
UIM coverage in part or in full. (Dkt. No. 40 at 2.) As explained above, GEICO was entitled to
offset Henry's UIM recovery by the $50,395.61 he had already recovered through his workers'
compensation and liability claims. A jury would therefore have had to find Henry's damages to
be in excess of $50,395.61 before GEICO would owe any money to Henry under the UIM
A jury would have had to find Henry's damages to be in excess of $75,395.61 before
GEICO would owe Henry the full UIM coverage policy limit of $25,000.
GEICO did not expect that a jury would award Henry $75,395.61 because Henry's
medical bills were only $10,617 and, although Henry claimed lost wages close to $20,000 for
missing work from September 2011 to December 2012, Henry's physician had given him returnto-work authorization without any restrictions just one month after the accident. Finally, GEICO
relied on the advice of its counsel Ed Lawson, who did not believe a jury would award Henry
damages in excess of the sums he had already received that would offset his UIM recovery. (Dkt.
In the weeks leading up to trial, the parties exchanged settlement offers and
counteroffers. On May 11, 2015, Henry offered $10,000 to settle, but he later reduced his
demand to $5,000. (Dkt. No. 40-11 at 3-4.) GEICO offered to settle the case for $2,500, and
Henry rejected that offer. (Id.) Unable to reach a settlement agreement, the parties went to trial
on June 15, 2015 at the Georgetown County Court of Common Pleas. (Dkt. No. 40-1at8.) After
two days of testimony, the jury awarded Henry damages of $250,000. (Id.) GEICO tendered the
available $25,000 UIM policy limit to Henry. (Dkt. No. 40-7 at 12.)
E. Henry Files this Lawsuit Against GEICO Alleging Bad Faith Refusal to Pay
his UIM Benefits
On August 7, 2015, Henry sued GEICO in the Georgetown County Court of Common
Pleas asserting a claim for bad faith. (Dkt. No. 1-1.) The case was removed to this Court in
September 2015. (Dkt. No. 1.)
Henry argues that GEICO acted in bad faith when it
unreasonably refused to accept a compromise settlement. (Dkt. No. 1-1 at. 5.) Henry seeks
"actual damages for the additional costs of trial and for the verdict rendered" (i.e., the excess
verdict) as well as punitive damages. (Id. at 6.)
GEICO has filed a motion for summary judgment on three grounds: (1) South Carolina
has never recognized a cause of action on a UIM insurance carrier' s failure to settle a UIM
claim, and it would not do so here where the refusal to settle is based upon a valuation dispute;
(2) even if South Carolina would recognize a cause of action for bad faith against a UIM carrier,
the evidence in this case fails to create a material issue of fact; and (3) even if South Carolina
would recognize a cause of action for bad faith against a UIM carrier, the amount of the jury' s
verdict cannot serve as a measure of damages in the bad faith action. (Dkt. No. 40 at 1.)
A. Summary Judgment
Summary judgment is appropriate if a party "shows that there is no genuine dispute as to
any material fact" and that the movant is entitled to judgment as a matter of law. Fed. R. Civ. P.
56(a). In other words, summary judgment should be granted "only when it is clear that there is
no dispute concerning either the facts of the controversy or the inferences to be drawn from those
facts ." Pulliam Inv. Co. v. Cameo Props., 810 F.2d 1282, 1286 (4th Cir. 1987). "In determining
whether a genuine issue has been raised, the court must construe all inferences and ambiguities
in favor of the nonmoving party." HealthSouth Rehab. Hosp. v. Arn. Nat '! Red Cross, 101 F.3d
1005, 1008 (4th Cir. 1996). The party seeking summary judgment carries the initial burden of
demonstrating to the court that there is no genuine issue of material fact. Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986).
Once the moving party has made this threshold demonstration, the non-moving party, to
survive the motion for summary judgment, may not rest on the allegations averred in his
pleadings. Id. at 324. Rather, the non-moving party must demonstrate that specific, material
facts exist that give rise to a genuine issue. Id. Under this standard, "[c]onclusory or speculative
allegations do not suffice, nor does a ' mere scintilla of evidence"' in support of the non-moving
party's case. Thompson v. Potomac Elec. Power Co., 312 F.3d 645, 649 (4th Cir. 2002) (quoting
Phillips v. CSX Transp., Inc., 190 F.3d 285 , 287 (4th Cir. 1999)).
B. Bad Faith
In South Carolina, if "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. Maryland Cas. Co., 473 S.E.2d
52, 53 (S.C.1996) (quoting Nichols v. State Farm Mut. Auto. Ins. Co., 306 S.E.2d 616 (S.C.
1983)). Bad faith can occur even without breach of any provision of an insurance contract.
Tadlock Painting, 473 S.E.2d at 55 (" [T]he benefits due to an insured are not limited solely by
those expressly set out in the contract."). For a bad faith claim to be successful, the plaintiff bears
the burden of showing: (1) the existence of an insurance contract between the parties; (2) refusal
by the insurer to pay benefits due under the contract; (3) that the refusal resulted from the
insurer's bad faith or unreasonable action; and (4) that the refusal caused damage to the insured.
Howard v. State Farm Mut. Auto. Ins. 450 S.E.2d 582, 586 (S.C. 1994).
Henry alleges that GEICO knowingly acted in bad faith when it refused to settle the UIM
dispute and "fail[ed] reasonably to evaluate [his] claims or to resolve the claim." (Dkt. No. 1-1 at
5.) This Court disagrees. In 2008, District Court Judge Patrick Michael Duffy granted summary
judgment for an insurance company after considering a very similar set of facts. Snyder v. State
Farm Mut. Auto. Ins. Co., 586 F . Supp. 2d 453 (D.S .C. 2008). In Snyder, an underinsured
motorist struck and injured a bicycle rider with his vehicle. Id. at 454, 460. After the insurer paid
the liability insurance coverage limits, there was a dispute about whether the bike rider' s
damages would reach the UIM coverage in light of offsets from sums recovered on other claims.
Id. at 455. The parties went to trial, the jury awarded the plaintiff a substantial sum in damages,
and the insurer tendered the UIM coverage to its limit. Id. at 455-56. The plaintiff subsequently
sued the insurer for, among other claims, bad faith refusal to pay benefits.
Judge Duffy granted the insurer's motion for summary judgment, holding that although
"South Carolina law most assuredly recognizes a cause of action for bad faith refusal to pay
benefits to a first-party insured," bad faith is not necessarily shown by evidence that a carrier
forced someone to go to court to receive benefits. Id. at 458-59. Judge Duffy found that the
insurer did not act in bad faith because it had a reasonable ground for contesting the claim. Id.
("The law certainly does not require every insured with UIM coverage who has initiated an
action against an at-fault driver to receive a settlement offer for some money. The reality is that
some claims would be frivolous, and insurers must have the ability to protect their own
Like the court in Snyder, this Court must determine whether there is any genuine dispute
of material fact about whether GEICO acted in bad faith or whether GEICO had a reasonable
ground for contesting the valuation of Henry's injuries. Henry has offered no evidence beyond
conclusory statements and inferences to support of his claim that GEICO ' s actions were in bad
faith. The only evidence Plaintiff provides is his own trial Counsel's testimony that he believed
the claim was worth more. Like the insurer in Snyder, the evidence shoes that GEICO based its
estimation of Henry's damages on all the evidence available in the case, including Henry's
$10,000 in medical bills, $20,000 in lost wages, and his doctor' s giving him return-to-work
authorization just a month after the accident. Medical damages and lost wages in this case fell
way below the total offset. Based on these considerations, GEICO made a settlement offer of
$2,500. Henry's pre-trial settlement offer of $5,000 suggests that GEICO's offer was not
unreasonable. See Collins v. Auto-Owners Ins. Co., 438 F. App'x 247, 249 (4th Cir. 2011)
("[T]he fact that the parties had different estimations of the value of a claim is not, under South
Carolina law, evidence of bad faith on the part of the party offering the lower amount.").
In Snyder, the court held that "if it was clear that the insured suffered damages 'greatly in
excess' of the liability limits of the at-fault party, the insurer could not in bad faith delay or
withhold benefits to which it was certain that the insured was entitled." Snyder, 586 F. Supp. 2d
at 459 (citing Myers v. State Farm Mut. Auto. Ins. Co., 950 F. Supp. 148, 151 (D.S.C. 1997)). If
it were "clear" that the Henry had suffered damages "greatly in excess" of the $50,395.61 that he
had already recovered (and for which GEICO was entitled to as an off-set), then there is no
rational explanation as to why GEICO would have refused Henry's $5,000 settlement offer on
the eve of trial. As in Snyder, the record shows that GEICO simply made a reasonable yet costly
error in calculating the amount of damages a jury was likely to award Henry for his injuries. 1
That GEICO's prediction was wrong does not establish that it acted unreasonably or in bad faith.
As Judge Duffy explained in Snyder, finding otherwise "would run the risk of turning every case
in which an insurer and an insured were not able to reach a settlement and the insured went on to
win a large verdict into a case for bad faith refusal to pay against the insurer." Snyder, 586 F.
Supp. 2d at 461.
The insurance company prevailed on summary judgment in Snyder even though the
plaintiff had the benefit of a more compelling set of facts. The plaintiff in Snyder was diagnosed
The Court has relied on the damages that are not in dispute. The parties dispute the extent to which this
accident impacted plaintiffs career prospects or caused other quantifiable damages . To support a bad faith claim,
the damages would have to be "clear." Even considering the facts in a light most favorable to Henry, his allegations
that he suffered damages beyond the $30,000 in medical bills and lost wages could not clearly establish that he
suffered damages "greatly in excess" of$75,395.61, the amount needed to reach the upper end of the UIM coverage
with a 10% disability, and his insurance company at no point proposed any settlement offer
"which would not have forced Snyder to go through some sort of trial to get his UIM benefits."
Snyder, 586 F. Supp. 2d at 455. 2 In this case, GEICO's settlement offer of $2,500 was not far
from Henry's offer of $5,000, and it would have allowed both parties to avoid going to trial.
Although Plaintiff contends that "no reasonable jury could award damages in amount less than
the coverage," for all the reasons above, this Court disagrees . Clearly, reasonable minds have
differed on the appropriate calculation of damages in this case, but the question before the Court
is limited to whether GEICO acted in bad faith when it refused Plaintiffs settlement offer.
Plaintiff has not alleged facts sufficient to create a genuine dispute of material fact about whether
GEICO was certain Henry suffered damages that were greatly in excess of the UIM coverage
limit and withheld those benefits in bad faith.
Plaintiff's Motion to Certify Questions
After GEICO filed its motion for summary judgment, Henry filed a motion to certify the
following two questions to the South Carolina Supreme Court: (1) Does South Carolina Law
recognize a cause of action for a UIM insurer's failure to settle a UIM claim; (2) If the answer to
the first question is yes, what is the measure of damages and what are the types of damages
recoverable in a bad faith action against a UIM carrier for failure to settle a UIM claim?
Rule 244 of the South Carolina Appellate Court Rules allows the South Carolina
Supreme Court, in its discretion, to answer questions of law certified to it by any federal court
when requested by the certifying court in cases involving "questions of law of this state which
may be determinative of the cause then pending in the certifying court."
The question Plaintiff seeks to certify to the Supreme Court of South Carolina is not
outcome determinative in this case.
As explained above, GEICO is entitled to summary
The insurance company in Sny der would only agree to set a minimum and maximum award for summary jury trial.
judgment because Henry has failed to allege facts which create a genuine dispute of material fact
about whether GEICO acted in bad faith when it refused Henry' s offer to settle the claim for
For the reasons set forth above, Defendant' s Motion for Summary Judgment (Dkt. No.
40) is GRANTED. Plaintiffs Motion to Certify Questions (Dkt. No. 41) is DENIED.
AND IT IS SO ORDERED.
Richard Mark Gergel
United States District Court Judge
August 2-, 2017
Charleston, South Carolina
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