Ohio Casualty Insurance Company v. Lifeguard Fire Protection Inc et al
CONSENT ORDER CONCERNING COLLATERAL SECURITY granting 9 Motion for Preliminary Injunction. Signed by Honorable J Michelle Childs on 9/12/2017.(asni, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
LIFEGUARD FIRE PROTECTION, INC.,
CAREY M. SMITH, MELBA D. SMITH,
JAMIE PATTERSON, and KIM
OHIO CASUALTY INSURANCE
CIVIL ACTION NO.: 3:17-cv-01658-JMC
This matter is before the Court on Plaintiff Ohio Casualty Insurance Company’s (“Ohio
Casualty”), Motion for Preliminary Injunction (ECF No. 9), filed on June 23, 2017, seeking
specific performance of the collateral security provisions in the General Indemnity Agreement
(“Motion”). Defendants Lifeguard Fire Protection, Inc. (“Lifeguard”), Carey M. Smith, Melba
D. Smith, Jamie Patterson, and Kim Patterson (collectively, “All Defendants”), responded to the
Motion and opposed the requested preliminary injunction. Both parties filed Memorandums of
Law with the Court. The Court scheduled a hearing on the Motion for August 1, 2017. Prior to
the hearing, the parties advised the Court that they had reached an agreement to resolve Ohio
Casualty’s Motion and would be presenting a proposed Consent Order Concerning Collateral
Security (“Consent Order”) for the Court’s consideration.
Based upon the consent of the parties, as indicated by their attorneys’ signature to this
Consent Order and the Court’s review of the file, Ohio Casualty’s Motion for Preliminary
Injunction seeking the posting of collateral security is GRANTED and the Court ORDERS, as
While all Defendants may be jointly and severally liable to Ohio Casualty to post
collateral security in the total amount of at least $652,172.43, only Defendants Carey M. Smith
and Melba D. Smith are financially able to post collateral to secure Ohio Casualty against failure
of payment of any final judgment against Defendant Carey M. Smith and Melba D. Smith or
other default as defined herein.
Defendant Carey M. Smith and Defendant Melba D. Smith (“Defendant Smiths”)
are ordered to take the following actions in connection with the Sentinel Security Life Insurance
Company Annuity Contract Number 012-08-005970: (1) Provide notice to Sentinel Security
Life Insurance Company that Defendant Smiths will not extend the annuity beyond September
28, 2017, and that Defendant Smiths will surrender said annuity and redeem the contract amount
and any interest due thereon; (2) Terminate this Annuity Contract and collect the cash proceeds
to be used as collateral security in this case; and (3) To deliver said cash proceeds from the
annuity along with additional cash as necessary to deposit a total of $318,756.18, to the Trust
Account of Shumaker, Loop & Kendrick, LLP, to be held as collateral security pursuant to the
General Indemnity Agreement executed by the Defendants.
Defendant Smiths, and to the extent action is needed by other Defendants, are
ordered to take the following actions in connection with the Equitrust Life Insurance Company,
Annuity Contract Number EQ0001180863F: (1) Provide notice to Equitrust Life Insurance
Company that Defendants are assigning as collateral their interest in said Annuity Contract to
Ohio Casualty; (2) Take all action necessary to promptly grant a fully perfected security interest
in said annuity to Ohio Casualty; (3) Cooperate in obtaining from Equitrust Life Insurance
Company acknowledgement of the receipt of the collateral assignment and obligation to honor
said assignment; and (4) Fully execute the attached Assignment As Collateral (Exhibit A) and
cooperate in the delivery of the Assignment As Collateral to Equitrust Life Insurance Company.
All Defendants will take all action necessary in connection with the above annuity
contracts to accomplish the above, including providing and obtaining written permission of all
parties identified in the annuity contracts, including primary and contingent beneficiaries, who
might be required to consent to the above actions being taken.
In regard to the Assignment as Collateral of Equitrust Life Insurance Company
Annuity Contract Number EQ0001180863F (“Equitrust Annuity”) the following provisions shall
Upon assignment of the Equitrust Annuity, Ohio Casualty will have a
secured interest in it and will be able to take full ownership of it upon default by Defendants
Carey M. Smith or Melba D. Smith.
A default occurs upon Ohio Casualty obtaining a judgment against
Defendants Carey M. Smith or Melba D. Smith in this action and their failure to pay the
judgment within thirty (30) days.
A default also occurs if Defendants Carey M. Smith and Melba D. Smith
file for bankruptcy.
During the time when there is no default, Defendant Smiths may receive
the monthly payments due under the Equitrust Annuity, as long as such payments do not reduce
the original contract amounts.
Ohio Casualty may, but is not required, to file a UCC-1 in connection with
the Equitrust Annuity.
This is an Order for specific performance covered under Rule 62(a)(1) of the
Federal Rules of Civil Procedure.
Failure of the Defendants to abide by this Order and post the required collateral
security will result in the Court using its inherent powers, and those granted by Rule 70 of the
Federal Rules of Civil Procedure, to enforce this Order.
SO ORDERED, this the 12th day of September, 2017.
United States District Judge
Columbia, South Carolina
The parties consent to the entry of this Consent Order Concerning Collateral Security.
OHIO CASUALTY INSURANCE COMPANY:
/s/ Megan M. Stacy
William H. Sturges, Esq.
North Carolina State Bar No. 8524
Megan M. Stacy, Esq.
North Carolina State Bar No. 47108
Shumaker, Loop & Kendrick, LLP
101 South Tryon Street, Suite 2200
Charlotte, North Carolina 28280-0002
Telephone: (704) 375-0057
Facsimile: (704) 332-1197
Attorney of Record for Plaintiff
Ohio Casualty Insurance Company
LIFEGUARD FIRE PROTECTION, INC.,
CAREY M. SMITH, MELBA D. SMITH,
JAMIE PATTERSON, and KIM PATTERSON:
/s/ Frank Smith
Frank Smith, Esq.
1900 Barnwell Street
Columbia, South Carolina 29201
/s/ Daniel T. Brailsford
Daniel T. Brailsford, Esq.
72 Rocky Cove Road
Lexington, South Carolina 29072
Attorneys of Record for Defendants Lifeguard
Fire Protection, Inc., Carey M. Smith, Melba
D. Smith, Jamie Patterson, and Kim
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