Mullen v. State Farm Casualty and Fire Company

Filing 28

ORDER granting 20 Motion for Summary Judgment. Signed by Honorable Joseph F Anderson, Jr on 06/01/2010.(bshr, )

IN THE UNITED STATES DISTRICT COURT F O R THE DISTRICT OF SOUTH CAROLINA C O L U M B IA DIVISION E d d ie Mullen, ) ) P l a in tif f , ) ) vs. ) ) S ta te Farm Casualty and Fire Company, ) ) D e f e n d a n t. ) ) C / A No.: 09-2392-JFA

ORDER

T h is case concerns a dispute over an insurance company's duty to advise a policy h o ld e r. The matter is currently before the court on the motion for summary judgment of ( D k t . No. 20) defendant State Farm Fire and Casualty Company ("State Farm") against p la in tif f Eddie Mullen ("Mullen"). The parties fully briefed the motion and presented oral a rg u m e n t to the court at a May 10, 2010 hearing, where the court took the motion under a d v ise m e n t. This order serves to announce the ruling of the court. I. B a c k g ro u n d F ire consumed Mullen's home at 28 Hunters Pond Drive in Columbia, South Carolina, o n August 19, 2007, effecting a total loss. Mullen thereafter filed a claim against his home o w n e r's insurance policy issued by State Farm (the "Policy"), and retained Interclaim W o rld w id e Claims Consultants ("Interclaim") to assist him in determining the loss suffered to the contents of the house. At the time the Policy was renewed in 2007, it provided c o v e ra g e in the amount of $202,900 for any actual loss sustained by Mullen's home and an a d d itio n a l $40,580 in coverage pursuant to an Option ID, which is State Farm shorthand for

" In c re a se d Dwelling Limit." In the aftermath of the fire, Mullen made three claims on the p o lic y: (1) for the loss of the home, (2) the loss of the contents, and (3) his living expenses in the interim. On September 5, 2007, State Farm issued Mullen a draft in the amount of $ 2 0 4 ,0 0 6 .9 3 in response to Mullen's claim for the loss of his home; $203,509 of which rep rese n ted the policy limit for the dwelling at the time of the fire. In April 2009, State Farm issue d a draft in the amount of $91,338 in response to Mullen's contents claim. State Farm a ls o fully reimbursed Mullen for certain living expenses. O n August 18, 2009, Mullen filed suit against State Farm in the Court of Common P lea s for Richland County, South Carolina. State Farm thereafter removed the case to f e d era l court on September 10, 2009, on the basis of diversity jurisdiction. 28 U.S.C. § 1332. M u llen 's complaint alleges claims for bad faith refusal to pay benefits, breach of contract, n e g lig e n c e, and gross negligence and seeks actual damages, punitive damages, and attorney f e e s. The bad faith and breach of contract claims are based on Mullen's assertion that State F a rm failed to pay sufficient benefits in a timely fashion. The negligence theories rely on M u lle n 's argument that State Farm owed him a duty to adequately insure his home. II. S tand ard R u le 56(c) of the Federal Rules of Civil Procedure provides that summary judgment s h o u ld be granted "if the pleadings, the discovery and disclosure materials on file, and any a f f id a v its 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). "[T]he mere existence of

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s o m e alleged factual dispute between parties will not defeat an otherwise properly supported m o tio n for summary judgment; the requirement is that there be no genuine issue of material f a ct." Ballenger v. N.C. Agric. Extension Serv., 815 F.2d 1001, 1005 (4th Cir. 1987) (e m p h a s is omitted). A fact is material if proof of its existence or non-existence would affect th e disposition of the case under the applicable law. Anderson v. Liberty Lobby, Inc., 477 U .S . 242, 248­49 (1986). An issue is genuine if the evidence offered is such that a re a so n a b le jury might return a verdict for the nonmovant. Id. at 257. In cases where the p a rtie s dispute material facts, "the non-moving party is entitled to have his evidence as f o re c a st assumed, his version of that in dispute accepted, and the benefit of all favorable in f e re n c es ." Henson v. Liggett Group, Inc., 61 F.3d 270, 275 (4th Cir. 1995). Moreover, the c o u r t "may not make credibility determinations or weigh the evidence." Williams v. Staples, Inc ., 372 F.3d 662, 667 (4th Cir. 2004). III. D is c u ss io n A s an initial matter, the court notes that Mullen "generally concurs with the factual b a c k g ro u n d summarized by [State Farm] in its Motion for Summary Judgment" and as rec o u n ted by Gary Williamson ("Williamson"), the State Farm agent who processed Mullen's in s u ra n c e application. (Resp. 1.) Also, at the May 10, 2010 hearing, Mullen abandoned the b a d faith and breach of contract claims. See also Fed. R. Civ. P. 56(e). A. N e g lig e n c e and Gross Negligence

M u lle n alleges that State Farm's agents failed to exercise due care in providing

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M u lle n with appropriate coverage for his home. Under South Carolina law, an insurance a g e n t has no duty to advise an insured at the point of application, absent an express or im p lie d undertaking to do so. Houck v. State Farm Fire & Cas. Inc. Co., 620 S.E.2d 326, 329 (S .C . 2005); Trotter v. State Farm, 377 S.E.2d 343 (S.C. App. 1988). In considering whether a duty has been impliedly created, the Supreme Court of South Carolina has identified s e v e r a l factors to guide a court's inquiry: (1) consideration beyond mere payment of a p re m iu m ; (2) a clear request for advice; and (3) a course of dealing that would put an agent o n notice that advice is being sought and relied on. Houck, 620 S.E.2d at 329. T h is case does not appear to present a situation where additional consideration was p a id nor does it appear to involve a course of dealing. The question is whether Mullen made a clear request for advice as to how much insurance he needed to replace his house. H o w e v e r, the record does not reflect a clear request for advice from Mullen. Fed. R. Civ. P . 56(c)(2), (e)(1). Mullen's complaint does allege a conversation he had with Williamson reg ard ing the adequacy of coverage to rebuild his home in the event of fire (Compl. ¶¶ 4,5). H o w e v e r, an allegation that a conversation occurred is different in form and effect from a c le a r interrogatory to an insurance agent sufficient to trigger an implied duty. Houck requires a clear request for advice, not a general conversation concerning adequacy of coverage. 620 S .E .2 d at 329. Accordingly, the court grants State Farm's motion for summary judgment as to the negligence and gross negligence claims. The court notes that even if Mullen had established that he made a clear request for

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a d v ice as envisioned by Houck, the deposition excerpts of Williamson Mullen attached to h is response indicate that Mullen contacted Williamson and requested that his coverage be re d u c e d , and that State Farm complied with his request. (Williamson Dep. 62:19­21.) A c c o rd in g ly, even if Mullen properly established that he made a clear request for advice, the c o u rt finds that his action in requesting a reduction in coverage effects a clear break in the c a u sa l chain between any advice offered or duty owed, and the resulting Policy limit. In a similar vein, there is a line of cases in South Carolina holding that where an in s u re d fails to read and familiarize himself with a policy, the insured abandons all care and is thus more negligent than the agent. See Carolina Prod. Maint., Inc. v. U.S. Fid. & Guar. C o ., 425 S.E.2d 39, 42 (S.C. App. 1992). See also Doub v. Weathersby-Breeland Ins. A g en cy, 233 S.E.2d 111 (1977). These cases would present marked difficulty for Mullen's c la im s even if he were able to show that he clearly requested advice from Williamson. IV . C o n c lu s io n T h e court hereby grants State Farm's motion for summary judgment (Dkt. No. 20) b e c au s e Mullen failed to show that he clearly made a request for advice. See Fed. R. Civ. P . 56(e). The court also finds that even if Mullen could establish that he clearly requested a n d then received incorrect advice from State Farm, the deposition excerpts that Mullen re lie s on in his response indicate that Mullen requested his coverage be reduced and that such r e q u e s t bars Mullen from proving the causation element of his negligence theories.

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IT IS SO ORDERED.

Ju n e 1, 2010 C o lu m b ia , South Carolina

J o s e p h F. Anderson, Jr. U n ite d States District Judge

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