Evans v. Nautilus Insurance Company
ORDER granting 23 Motion for Summary Judgment Signed by Honorable David C Norton on January 12, 2017.(cban, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
James N. Evans, individually and as
owner/agent of Club Ro-Za Bar & Grill,
Club Ro-Za Bar & Grill
d/b/a Club Ro-Ze
Nautilus Insurance Company,
This matter is before the court on defendant Nautilus Insurance Company’s
(“Nautilus”) motion for summary judgment, ECF No. 23. For the reasons set forth
below, the court grants the motion.
This matter arises out of an insurance contract. Compl. ¶ 2. James N. Evans
(“Evans”) owns and operates Club Ro-Za Bar and Grill (“Club Ro-Za”) (together,
“plaintiffs”). Nautilus had issued a commercial general liability insurance policy (the
“Policy”) for Club Ro-Za, with effective dates of February 2, 2012 to February 2, 2013.
Pl.’s Resp., 2. On September 3, 2012, Tirele Green (“Green”) was in a vehicle when he
was shot by a patron of Club Ro-Za. Id. Plaintiffs contend that Green was shot
inadvertently while the patron fired his weapon indiscriminately as a result of his drunken
state. Id. Nautilus, on the other hand, contends that the shooting was an intentional
assault. On or about November 5, 2014, Green filed an action in the Charleston County
Court of Common Pleas against Evans, alleging premises liability resulting from
plaintiffs’ negligence in connection with the shooting. Compl. ¶ 5. Shortly thereafter,
Evans contacted Nautilus to request that it defend and indemnify plaintiffs in accordance
with the Policy. Id. ¶ 6. Nautilus responded that the Policy provided no coverage and
refused to provide a defense. Id. ¶ 7. A default judgment was eventually entered against
plaintiffs, granting Green $250,000 in actual damages and $1,250,000 in punitive
damages. Id. ¶ 9.
Plaintiffs filed the instant action against Nautilus in state court on February 16,
2017. ECF No. 1. The action was removed to this court on March 22, 2017. ECF No. 5.
Plaintiffs filed an amended complaint on August 3, 2017, alleging the following causes of
action: (1) breach of contract; (2) bad faith; and (3) punitive damages. ECF No. 19. On
September 27, 2017, Nautilus filed a motion for summary judgment, ECF No. 23, to
which plaintiffs responded on October 23, 2017, ECF No. 28. Nautilus replied on
October 27, 2017, ECF No. 30, and plaintiffs filed a sur reply on November 3, 2017, ECF
No. 32. The court held a hearing on this motion on December 12, 2017. This motion is
now ripe for the court’s review.
Summary judgment shall be granted “if the pleadings, the discovery and
disclosure materials on file, and any affidavits show 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(c). Rule 56(c) of the Federal Rules of Civil Procedure requires that the district
court enter judgment against a party who, ‘after adequate time for discovery . . . fails to
make a showing sufficient to establish the existence of an element essential to that party’s
case, and on which that party will bear the burden of proof at trial.’” Stone v. Liberty
Mut. Ins. Co., 105 F.3d 188, 190 (4th Cir. 1997) (quoting Celotex Corp. v. Catrett, 477
U.S. 317, 322 (1986)). “By its very terms, this standard provides that the mere existence
of some alleged factual dispute between the parties will not defeat an otherwise properly
supported motion for summary judgment; the requirement is that there be no genuine
issue of material fact.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–48 (1986).
“Only disputes over facts that might affect the outcome of the suit under the governing
law will properly preclude the entry of summary judgment.” Id. at 248. “[S]ummary
judgment will not lie if the dispute about a material fact is ‘genuine,’ that is, if the
evidence is such that a reasonable jury could return a verdict for the nonmoving party.”
“[A]t the summary judgment stage the judge’s function is not himself to weigh
the evidence and determine the truth of the matter but to determine whether there is a
genuine issue for trial.” Id. at 249. When the party moving for summary judgment does
not bear the ultimate burden of persuasion at trial, it may discharge its burden by
demonstrating to the court that there is an absence of evidence to support the non-moving
party’s case. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). The non-movant must
then “make a showing sufficient to establish the existence of an element essential to that
party’s case, and on which that party will bear the burden of proof at trial.” Id. at 322.
Any reasonable inferences are to be drawn in favor of the nonmoving party.
Anderson, 477 U.S. at 255, Webster v. U.S. Dep’t of Agric., 685 F.3d 411, 421 (4th Cir.
2012). However, to defeat summary judgment, the nonmoving party must rely on more
than conclusory allegations, mere speculation, the building of one inference upon
another, or the mere existence of a scintilla of evidence. See Anderson, 477 U.S. at 252;
Stone, 105 F.3d at 191. Rather, “a party opposing a properly supported motion for
summary judgment . . . must ‘set forth specific facts showing that there is a genuine issue
for trial.’” Bouchat, 346 F.3d at 522 (quoting Fed. R. Civ. P. 56(e) (2002) (amended
2010)). If the adverse party fails to provide evidence establishing that the fact-finder
could reasonably decide in his favor, then summary judgment shall be entered “regardless
of ‘[a]ny proof or evidentiary requirements imposed by the substantive law.’” Id.
(quoting Anderson, 477 U.S. at 248).
Nautilus requests that the court grant summary judgment on all of plaintiffs’
causes of action based on two grounds: (1) no insurance policy existed on the date of the
underlying incident; and (2) even if the policy had been in effect, the shooting constitutes
an excluded assault or battery. Mot. Sum. Judg., 1. The court grants summary judgment
based on the non-existence of the policy on the date of the shooting and refrains from
addressing the question of whether the shooting constitutes an excluded assault or
In February 2012, Nautilus issued the Policy to Ro-Za Bar and Grill, with a policy
period extending from February 2, 2012 to February 2, 2013. ECF No. 23-2. On
February 2, 2012, plaintiffs entered into a finance agreement with IPFS Corporation
(“IPFS”) to finance the insurance policy issued by Nautilus. Mot. Sum. Judg., 3.
Pursuant to this financing agreement, plaintiffs made monthly payments to IPFS and
appointed IPFS as their attorney-in-fact, giving IPFS full authority to cancel the Policy if
plaintiffs were to default on their payments. Id. Plaintiffs failed to make a scheduled
payment on August 2, 2012, and IPFS mailed plaintiffs a notice of intent to cancel the
Policy on August 7, 2012, warning that the Policy would be cancelled if plaintiffs failed
to make the overdue payment within ten days. Id. When plaintiffs did not make the
payment within ten days, IPFS mailed a Notice of Cancellation to Nautilus on August 27,
2012, cancelling the policy effective September 1, 2012. Id. The shooting of Green
occurred two days later.
Nautilus argues that due to the above-referenced notices, the Policy was not in
effect at the time of the shooting, and so Nautilus owed no duty to defend or indemnify
plaintiffs in the underlying action. Id. at 9. In response, plaintiffs contend that IPFS and
Nautilus’s attempted cancellation did not comply with South Carolina Code § 38-39-90,
and thus the Policy remained in effect at the time of the shooting. Pl.’s Resp., 4. South
Carolina Code § 38-39-90, titled “Cancellation of insurance contracts by premium service
company,” provides as follows:
(a) If a premium service agreement contains a power of attorney enabling
the company to cancel an insurance contract listed in the agreement, the
insurance contract may not be canceled by the premium service company
unless the cancellation is effectuated in accordance with this section.
(b) The premium service company shall deliver to the insured at least ten
days’ written notice of its intent to cancel the insurance contract if there is
a default. This notice must be mailed or delivered not more than ten days
before the due date.
(c) Not less than five days after the expiration of the notice required
pursuant to the provisions of subsection (b), the premium service company
may after that time request in the name of the insured cancellation of the
insurance contract by delivering to the insurer a notice of cancellation . . . .
S.C. Code Ann. § 38-39-90 (emphasis added).
Plaintiffs point to the language of the notice of intent to cancel letter to argue that
it is inconsistent with the requirements of §38-39-90(b). The first page of the notice says
that “[i]f IPFS does not receive the amount due on or before 8/25/12 your financed
insurance policies will be cancelled.” ECF No. 28-2. The next page of the notice, under
a section titled “FOR SOUTH CAROLINA ONLY,” states that “WE WILL REQUEST
CANCELLATION OF THE POLICIES . . . UNLESS WE RECEIVE FULL PAYMENT
OF THE AMOUNT DUE WITHIN TEN DAYS FROM THE DATE OF THIS
NOTICE.” Id. (capitalization in the original). Plaintiffs argue that because this notice
was mailed on August 7, 2017—eighteen days before the “due date” of August 25, 2017
listed in the notice of intent to cancel—it violates § 38-39-90(b), which requires mailing
or delivery no more than ten days prior to the due date. Pl.’s Resp., 6. This argument
mischaracterizes § 38-39-90(b).
Section 38-39-90(b) sets forth two requirements: (1) the premium service
company must give the insured at least ten days’ written notice of its intent to cancel, and
(2) this notice may not be mailed to the insured more than ten days before the due date.
Here, IPFS mailed the notice of intent to cancel on August 7, 2012, and mailed a
cancellation letter on August 27, 2012, effective September 1, 2012. This August 7 letter
provided more than ten days’ written notice to plaintiffs before IPFS cancelled the
Policy.1 Second, IPFS did not mail the notice to plaintiffs more than ten days before the
“due date.” The phrase “due date” applies to the original due date of the premium. The
court interprets the statute as saying that a premium insurance company may deliver a
notice of their intent to cancel the insurance contract in advance of an insured party
actually defaulting, but they are not allowed to send this notice more than ten days in
advance of the due date for the payment on which the insured might default. Plaintiffs
Plaintiffs’ argument about the disparity between the two deadlines offered in the
notice of intent to cancel letter—between August 25, 2017 and “TEN DAYS FROM THE
DATE OF THIS NOTICE”—does not alter the analysis. Both of those dates provide at
least ten days written notice of the intent to cancel the policy because of the insured’s
failure to pay the premium.
conflate “due date” with the grace period deadline provided by IPFS. The August 25,
2017 grace period deadline in the notice of intent to cancel letter refers to the date by
which the plaintiffs must send in their past-due payment to avoid default. Here, the “due
date” under §38-39-90(b) was August 2, 2012, the original date that the monthly
premium was due. The notice was mailed on August 7, 2012, not more than ten days
before that due date.
Based on the above, the court finds that IPFS followed the proper cancellation
procedure, and that the Policy was not in effect on September 3, 2012, when Green was
shot. “Liability [for breach of an insurance contract] is predicated on the existence of a
valid contract of insurance coverage.” Peterson v. W. Am. Ins. Co., 518 S.E.2d 608, 614
(S.C. Ct. App. 1999), citing Fuller v. E. Fire & Cas. Ins. Co., 124 S.E.2d 602, 610 (S.C.
1962). Likewise, the first element of an action for bad faith refusal to pay benefits under
an insurance contract is “the existence of a mutually binding contract of insurance
between the plaintiff and the defendant.” Cock-N-Bull Steak House, Inc. v. Generali Ins.
Co., 466 S.E.2d 727, 730 (1996). Because there was no contract between Nautilus and
plaintiffs at the time of the underlying incident for which plaintiffs sought a defense and
indemnification, the court grants summary judgment to Nautilus on plaintiffs’ breach of
contract and bad faith claims.
For the foregoing reasons, the court GRANTS Nautilus’s motion for summary
AND IT IS SO ORDERED.
DAVID C. NORTON
UNITED STATES DISTRICT JUDGE
January 12, 2018
Charleston, South Carolina
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?