Todd v. Cary's Lake Homeowners Association et al
ORDER AND OPINION granting 20 Motion for Judgment on the Pleadings. Signed by Honorable J Michelle Childs on 12/29/2016.(asni, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
Owners Insurance Company,
Civil Action No.: 3:16-cv-00883-JMC
Before the court is a motion for judgment on the pleadings, pursuant to Fed. R. Civ. P.
12(c), filed by Defendant Owners Insurance Company (“Defendant”) (ECF No. 20), seeking
judgment in its favor on its counterclaim for declaratory judgment against Plaintiff Rachel Todd
(“Plaintiff”) (ECF No. 2 at 10-15) as well as on Plaintiff’s claims for bad-faith refusal to pay,
breach of contract, and breach of contract with fraudulent intent against it (ECF No. 1-1 at 18-20).
Plaintiff initiated this action by filing suit in the Court of Common Pleas for Richland
County, South Carolina, on February 16, 2016, against Defendant and against Cary’s Lake
Homeowners Association, Upper Rockyford Lake Owners Association, Inc., and Lake Elizabeth
Estates, Inc. (together, not including Defendant Owners Insurance Company, the “dam
Defendants”). (ECF No. 1-1.) In her complaint, Plaintiff alleges that “[o]n October 4, 2015, the
State of South Carolina experienced hours of intense rainfall as a result of the convergence of two
powerful weather systems” and that “[a]fter hours of rainfall, a dam in northeastern Richland
County cracked and then eventually broke completely, allowing a substantial amount of muddy
water to flow freely downstream through its earthen dike.” (Id. at 7.) Plaintiff specifically alleges
that the “release of contained water was not due to a breach of the dam because of the height of
the water but rather due to the failed and eroded construction of the body of the dam itself, as well
as a lack of maintenance needed to protect its integrity.” (Id.) Plaintiff further alleges that the
waters continued to flow through Gills Creek watershed causing several other dams owned or
maintained by the dam Defendants to fail or break. (Id.) “The effect of the dams’ breaking . . . was
a powerful surge of an enormous amount of water throughout the Columbia area,” which “sent an
incursion of water . . . into Plaintiff[s’] home . . . .” (Id. at 8.) Plaintiff asserted claims for
negligence, strict liability, and nuisance against the dam Defendants based on their alleged failure
to maintain, build, and/or operate the dams, the breaking of which allegedly contributed to the
damage of Plaintiff’s property. (Id. at 7-18.)
Plaintiff also alleges that her home was covered by an insurance policy entered into
between Defendant and Plaintiff and that Defendant refused to make payments to Plaintiff
allegedly due under the policy’s terms on the basis that the policy excluded coverage for damage
caused by flooding. (Id. at 9; see ECF No. 1-3 at 40-67; ECF No. 1-4 at 1-42.) The exclusion at
issue states that Defendant
do[es] not cover loss to covered property caused directly or indirectly by any
of the following, whether or not any cause or event contributes concurrently or
in any sequence to the loss:
Water damage meaning:
(a) regardless of the cause, flood . . . .
(ECF No. 1-4 at 10, 38.) The policy also contains a notice that purports to be required by the South
Carolina Department of Insurance, with the heading “LIMITATIONS OR EXCLUSIONS
UNDER THIS POLICY” and stating, “Flood—Flood damage is not covered under your policy.”
(ECF No. 1-3 at 60.)
In her complaint, Plaintiff alleges that the exclusion set forth above
does not apply to the circumstances leading to Plaintiff’s losses to her home[,]
and payment should be made pursuant to the terms of the homeowner’s policy
in effect. The damage to the home was the direct result of broken manmade
dams due to failed construction and lack of maintenance; the negligence of
third-parties caused or greatly contributed to the damage to Plaintiff’s home. It
was not the result of a flood as contemplated within the language of the
Exclusion for water damage.
(ECF No. 1-1 at 19.) Based on the allegations set forth above, Plaintiff’s complaint includes a
claim for breach of contract against Defendant on the ground that Defendant failed to make
payments for the damages sustained by the home and a claim for breach of contract with fraudulent
intent based on the same failure to make payments. (Id. at 19-20.) The complaint also contains a
claim against Defendant for bad-faith refusal to pay based on an alleged breach of the implied
covenant of good faith and fair dealing again grounded on the same failure to make payments. (Id.
The action was removed to federal court pursuant to the court’s diversity jurisdiction (ECF
No. 1), and, following removal, the court entered an order severing the claims against the dam
Defendants, remanding them to state court, and retaining jurisdiction over the claims against
Defendant (ECF No. 31.) Defendant filed a counterclaim against Plaintiffs, seeking a declaratory
judgment, pursuant to 28 U.S.C. § 2201, et seq., “declaring that the [policy] does not provide
coverage for the flood damage to [Plaintiff’s home] under the circumstances presented in
[Plaintiff’s] action.” (ECF No. 2 at 14.)
On April 15, 2016, Defendant filed the instant motion for judgment on the pleadings,
pursuant to Rule 12(c), arguing that it is entitled to judgment on its claim for declaratory judgment
because the facts alleged by Plaintiff show that the policy does not provide coverage for the
damage sustained by Plaintiff’s home and that Plaintiff’s claims against Defendant fail as a matter
of law because they are all grounded on the allegation that the policy provides such coverage. (See
ECF No. 20.) Reduced to essentials, Defendants’ argument is that the term “flood,” as used in the
policy and in South Carolina law, encompasses the circumstances alleged by Plaintiff and,
therefore, that the water damage sustained by the home is not covered by the policy. (See id.)
Plaintiff has filed no response to the motion.
In a related case, Morris v. Auto-Owners Insurance Co., No. 3:16-cv-00880-JMC (D.S.C.),
involving a closely related affiliate of Defendant, 1 the court recently entered an order granting the
defendant’s motion for judgment on the pleadings. (See No. 3:16-cv-00880-JMC, ECF No. 70.)
The court takes note of the similarities between the instant case and Morris. Plaintiff’s complaint
and the plaintiffs’ complaint in Morris are indistinguishable for relevant purposes, alleging nearly
identical facts and asserting the same claims against Defendant and the closely affiliated defendant
in Morris. (Compare ECF No. 1-1 at 5-21, with No. 3:16-cv-00880-JMC, ECF No. 1-1 at 6-23.)
The insurance policies in both cases contain the exact same relevant provisions. (Compare ECF
No. 1-3 at 60, and ECF No. 1-4 at 10, 38, with No. 3:16-cv-00880-JMC, ECF No. 1-2 at 93, 118,
and No. 3:16-cv-00880-JMC, ECF No. 1-3 at 2.) The counterclaim that Defendant filed against
Plaintiff is nearly identical to the counterclaim its affiliate filed in the Morris case. (Compare ECF
No. 2 at 10-15, with No. 3:16-cv-00880-JMC, ECF No. 4 at 10-14.) Defendant’s motion for
judgment on the pleadings in the instant case is nearly identical to the motion for judgment on the
pleadings its affiliate filed in the Morris case. (Compare ECF No. 20, with No. 3:16-cv-00880JMC, ECF No. 23.) Moreover, the cases have followed nearly identical procedural paths.
There has been some confusion over the proper name for Defendant in this matter (see ECF No.
2 at 1; ECF No. 20 at 1; ECF No. 31 at 1 n.1) and for the similarly named defendant in the Morris
case (see No. 3:16-cv-00880-JMC, ECF No. 37 at 1 n.1). Regardless of the confusion, it is clear
that the defendants in both cases are closely affiliated. (Compare ECF No. 1-3 at 57, with No.
3:16-cv-00880-JMC, ECF No. 1-2 at 57.)
In the court’s order granting the affiliated defendant’s motion for judgment on the
pleadings in the Morris case, the court agreed that the defendant was entitled to judgment on the
claims. (No. 3:16-cv-00880-JMC, ECF No. 70.) Because the facts that have been alleged and the
arguments that have been advanced in the instant case are indistinguishable from those in Morris,
the court perceives no reason why the grounds for which it granted the affiliated defendant’s
motion in the Morris case would not apply equally as well to Defendant’s motion in this case.
Moreover, because Plaintiff has failed to oppose the motion, she has failed to apprise the court
with any reasons why the analysis advanced by Defendant in the instant motion and accepted by
the court in Morris should be rejected here. Thus, the court concludes that, for the reasons stated
in its order granting the affiliated defendant’s motion for judgment on the pleadings in the Morris
case, Defendant’s motion for judgment on the pleadings in the instant case should be granted.
Accordingly, Defendant’s motion for judgment on the pleadings, pursuant to Rule 15(c),
(ECF No. 20) is GRANTED. Defendant is entitled to a declaration that the policy excludes
coverage for the flood damage to Plaintiff’s home under the circumstances presented in Plaintiff’s
complaint. Additionally, Defendant is entitled to judgment in its favor on Plaintiff’s claims against
Defendant for breach of contract, breach of contract with fraudulent intent, and bad-faith refusal
to pay (ECF No. 1-1 at 18-20). Accordingly, it is ORDERED that judgment be entered in favor
IT IS SO ORDERED.
United States District Court Judge
December 29, 2016
Columbia, South Carolina
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