Tucker v. Peerless Insurance Company

Filing 29

ORDER AND OPINION: It is hereby ORDERED that Defendant's amended motion to dismiss (ECF No. 23 ) is DENIED and Plaintiff's motion to amend the complaint (ECF No. 26 ) is GRANTED. Signed by Honorable Bruce Howe Hendricks on 3/3/2017.(prou, )

IN THE DISTRICT COURT OF THE UNITED STATES
FOR THE DISTRICT OF SOUTH CAROLINA
FLORENCE DIVISION
)
Civil Action No.: 4:13-01809-BHH
)
Plaintiff, )
)
)
vs.
ORDER AND OPINION
)
)
)
Peerless Insurance Company,
)
Defendant. )
______________________________ )
Bobby Lee Tucker, Sr.,

This matter is before the Court on Defendant’s Amended Motion to Dismiss, (ECF
No. 23), and Plaintiff’s Motion for Leave to File Amended and Supplemental Complaint,
(ECF No. 26). For the reasons set forth below, the Defendant’s motion is DENIED and
Plaintiff’s motion is GRANTED.
BACKGROUND AND PROCEDURAL HISTORY
On the evening of April 30, 2010, Plaintiff was involved in a car accident in which
he struck a 650 pound metal block lying in the outside lane of Interstate 95, causing
Plaintiff to lose control and strike the overpass. A third party, Anthony Bernardo
(“Bernardo”), witnessed the accident and subsequently signed an affidavit attesting to
the truth and facts of the accident. Upon notification of the incident, South Carolina
Highway Patrol conducted an investigation. Plaintiff learned that on the day of the crash,
a witness observed a freightliner that contained a block on its flatbed, leaving a truck
stop. At the time, the witness thought the block “could be a problem” because it only had
a single strap across the top of the block. (ECF No. 26-1 ¶ 5.)

1

At the time of the crash, Plaintiff was driving his employer’s car. Plaintiff had
$100,000 in individual uninsured motorist (“UM”) coverage from Defendant Peerless
Insurance Company (“Defendant”) and $100,000 in UM coverage from his employer’s
carrier, Canal Insurance Company (“Canal”).1 On May 14, 2010, Plaintiff filed a “John
Doe” action, believing John Doe to be the driver of the freightliner seen on the day of the
accident. Plaintiff served the two UM carriers with process.2 Defendant and Canal
answered on John Doe’s behalf. After the parties exchanged written discovery and took
depositions, the UM carriers moved for summary judgment on whether the Bernardo
affidavit satisfied S.C. Code Ann. § 38-77-170(2). The trial court denied the motions on
June 15, 2011, finding that Plaintiff had “complied with all requirements set forth by the
legislature to bring this action under the uninsured motorist provision.” (ECF No. 24-1 at
5.)
By email dated June 20, 2011, Plaintiff’s trial counsel offered to settle the case if
both carriers tendered the policy limits under each applicable policy. Plaintiff confirmed
this offer on June 27, 2011, and stated the offer remained open until July 1, 2011.
Defendant did not respond to the settlement offer and, instead, moved for
reconsideration of its summary judgment motion on June 29, 2011, which the trial court
denied on August 30, 2011. (ECF No. 24-2.) Canal, however, engaged in settlement
talks and, after some negotiation, tendered the policy limits of $100,000 dollars by letter

1

Plaintiff’s policy with Defendant was an excess policy because the vehicle being operated by Plaintiff on
the night of the accident was owned by his employer and insured by Canal.
2
The state court docket lists the two insurance carriers as Canal Insurance Company and Montgomery
Insurance Company. Although the parties have not clarified, their briefs indicate that Montgomery
Insurance Company and Defendant Peerless Insurance Company are the same entity for the purposes of
this matter.

2

dated August 29, 2011. The case proceeded to trial with only Defendant defending John
Doe.
On April 15, 2013, the jury awarded Plaintiff $2,500,000 in actual damages and
$2,500,000 in punitive damages. On May 28, 2013, Plaintiff filed this action against
Defendant for bad faith and breach of contract. This action was stayed during
Defendant’s post-trial motion and appeals in the underlying state action. On December
16, 2013, the trial court reduced the punitive damages award, affirmed the actual
damages award, and entered judgment for Plaintiff in the amount of $3,000,000. The
South Carolina Court of Appeals affirmed the trial courts’ decision, and the South
Carolina Supreme Court denied certiorari on October 20, 2016. In December 2016,
Defendant tendered to Plaintiff the $100,000 policy limit and post-judgment interest.
(ECF No. 26-1 ¶ 35.)
This Court lifted the stay on October 26, 2016. Defendant filed an Amended
Motion to Dismiss in this action on November 16, 2016, to which Plaintiff responded on
December 1, 2016. On December 27, 2016, Plaintiff filed a Motion for Leave to File an
Amended and Supplemental Complaint. Defendant opposed the motion on January 5,
2017. Both motions are ripe and ready for the Court’s review.
STANDARD OF REVIEW
A.

Motion to Amend

Rule 15 of the Federal Rules of Civil Procedure allows a party to amend the
party’s pleading once as a matter of course at any time before a responsive pleading is
served. Fed. R. Civ. P. 15(a). Otherwise, a party may amend the party’s pleading only by

3

leave of court or by written consent of the adverse party. Id. Leave to amend a pleading
shall be freely given “when justice so requires.” Id. Thus, “leave to amend a pleading
should be denied only when the amendment would be prejudicial to the opposing party,
there has been bad faith on the part of the moving party, or the amendment would be
futile.” Johnson v. Oroweat Foods Co., 785 F.2d 503, 509 (4th Cir.1986).
B.

Motion to Dismiss

A plaintiff’s complaint should set forth “a short and plain statement . . . showing
that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). Rule 8 “does not require
‘detailed factual allegations,’ but it demands more than an unadorned, the-defendantunlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). To show that the plaintiff is
“entitled to relief,” the complaint must provide “more than labels and conclusions,” and “a
formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S.
at 555. In considering a motion to dismiss under Rule 12(b)(6), the Court “accepts all
well-pled facts as true and construes these facts in the light most favorable to the plaintiff
. . . .” Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc., 591 F.3d 250, 255 (4th Cir.
2009).
To survive a Rule 12(b)(6) motion to dismiss, a complaint must state “a plausible
claim for relief.” Iqbal, 556 U.S. at 679. “The plausibility standard is not akin to a
‘probability requirement,’ but it asks for more than a sheer possibility that a defendant
has acted unlawfully. Where a complaint pleads facts that are ‘merely consistent with’ a
defendant’s liability, it ‘stops short of the line between possibility and plausibility of

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entitlement to relief.’” Id. (quoting Twombly, 550 U.S. at 557). Stated differently, “where
the well-pleaded facts do not permit the court to infer more than the mere possibility of
misconduct, the complaint has alleged—but it has not ‘show[n]’—‘that the pleader is
entitled to relief.’” Id. (quoting Fed. R. Civ. P. 8(a)). Still, Rule 12(b)(6) “does not
countenance . . . dismissals based on a judge’s disbelief of a complaint’s factual
allegations.” Colon Health Centers of Am., LLC v. Hazel, 733 F.3d 535, 545 (4th Cir.
2013) (quoting Neitzke v. Williams, 490 U.S. 319, 327 (1989)). “A plausible but
inconclusive inference from pleaded facts will survive a motion to dismiss . . . .”
Sepulveda-Villarini v. Dep’t of Educ. of Puerto Rico, 628 F.3d 25, 30 (1st Cir. 2010)
(Souter, J.).
DISCUSSION
As an initial matter, the Court grants Plaintiff’s motion to amend the complaint
(ECF No. 26). There is no evidence that the proposed amendment would be prejudicial
to Defendant, nor has Defendant demonstrated any bad faith on the part of Plaintiff in
moving to amend the complaint. See Johnson, 785 F.2d at 509. Further, as discussed
below, the amendment would not be futile. The proposed amendment establishes
causes of action for breach of contract and bad faith.3
Turning to Defendant’s amended motion to dismiss (ECF No. 23), Defendant
makes similar arguments for dismissal both in its motion and in its opposition to Plaintiff’s

3
In a footnote, Defendant asserts that the Court should strike certain paragraphs of the amended
complaint relating to settlement negotiations. (ECF No. 27 at 3.) In support, it cites a Maryland case stating
that “any reference by Plaintiffs to communications with Defendant regarding settlement as ‘evidence’ of a
genuine dispute of material fact would be quite improper, and inadmissible.” Osunde v. Lewis, 281 F.R.D.
250, 259 (D. Md. 2012). The Maryland case has no application here. It relates to the summary judgment
standard, which is not currently before this Court.

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motion to amend the complaint. The Court has carefully considered all of Defendant’s
arguments and finds none to be persuasive. Defendant first argues that South Carolina
law has not expressly authorized a bad faith action against an UM carrier by its insured
and South Carolina courts would therefore not recognize such an action here. (ECF Nos.
23 at 4; 27 at 5.)
The South Carolina Supreme Court has held that “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.”
Nichols v. State Farm Mut. Auto. Ins. Co., 306 S.E.2d 616, 619 (S.C. 1983).
Furthermore, a bad faith claim may exist even in the absence of any violation of an
insurance contract provision, as “the benefits due an insured are not limited solely by
those expressly set out in the contract.” Tadlock Painting Co. v. Maryland Cas. Co., 473
S.E.2d 52, 55 (S.C. 1996).
While Nichols recognizes a first-party claim by the insured for bad faith in
processing claims for benefits, South Carolina courts have repeatedly denied actions for
bad faith refusal to pay claims to third parties who are not named insureds. See, e.g.,
Carter v. American Mut. Fire Ins. Co., 307 S.E.2d 227 (S.C. 1983); Cook v. Mack’s
Transfer & Storage, 352 S.E.2d 296 (S.C. Ct. App. 1986); Swinton v. Chubb & Son, Inc.,
320 S.E.2d 495 (S.C. Ct. App. 1984); but see Ateyeh v. Volkswagen of Florence, Inc.,
341 S.E.2d 378 (S.C. 1986) (applying a narrow exception to this rule for a ‘third-party’
spouse under the necessaries doctrine). Here, Defendant argues that South Carolina
courts would similarly deny Plaintiff’s action as an attempt by a third party to assert a bad

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faith claim against an insurer. Defendant argues that UM coverage would be considered
third party insurance “because from the outset of the lawsuit/claim, the parties are
adverse.” (ECF No. 23 at 5.)
While Defendant is correct that the South Carolina Supreme Court has not ruled
on the viability of a bad faith claim in the context of UM coverage, a South Carolina
district court has expressly found that should the issue arise in state court, the Supreme
Court would find such an action proper. In Jefferson v. Allstate Ins. Co., Judge G. Ross
Anderson denied a motion to dismiss a bad faith cause of action against the UM carrier.
673 F. Supp. 1401, 1403 (D.S.C. 1987). After noting Nichols’ recognition of a first-party
bad faith claim, Judge Anderson found that there was nothing in Nichols to suggest the
South Carolina Supreme Court would exclude a bad faith cause of action under the
uninsured motorist provisions of an automobile insurance policy. Id. In support, he noted
that “Nichols places no limitation on an insurer’s duty of good faith and fair dealing with
its insured.” Id.
In so finding, Judge Anderson expressly rejected the argument advanced by
Defendant here, stating, “the fact that an insurance company and its insured hold
adverse positions on the issue of liability ‘does not materially distinguish uninsured
motorist insurance from first party insurance with respect to the existence of a duty on
the part of the insurer to handle the insured’s claim fairly and in good faith.’” Id. at 1404
(quoting Craft v. Econ. Fire & Cas. Co., 572 F.2d 565, 569 (7th Cir. 1978)). Defendant
attempts to differentiate Craft, the Seventh Circuit opinion quoted here by Judge
Anderson, by noting that the Craft court found there was no fiduciary duty in an

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uninsured motorist situation. 572 F.2d at 569. In Craft, the court indeed found that a
fiduciary duty does not exist in an uninsured motorist situation because the insurer does
not control the insured’s side of the litigation. Id. However, the Craft court carefully
explained that a lack of fiduciary duty did not render “the insurer . . . completely free of
any obligation of good faith and fair dealing to its insured, since the latter duty is based
on the reasonable expectations of the insured and the unequal bargaining positions of
the contractants, rather than the insurance company’s ‘control’ of the litigation.” Id. Thus,
Craft supports finding a bad faith cause of action in UM coverage cases, and was
properly relied on in Jefferson.
Importantly, no South Carolina court has expressly disputed the reasoning laid out
in Jefferson. Indeed, at least two other courts in this district have commented approvingly
on the decision. See Collins v. Auto-Owners Ins. Co., 759 F. Supp. 2d 728, 733 (D.S.C.
2010), aff’d, 438 F. App’x 247 (4th Cir. 2011) (considering defendant’s motion for
summary judgment on a bad faith UM claim and noting that the duty of good faith and
fair dealing to insureds “has been recognized in the context of uninsured motorist
claims”) (citing Jefferson, 673 F. Supp. at 1403); Pollock v. Goodwin, No. 3:07-3983CMC, 2008 WL 216381, at *4 (D.S.C. Jan. 23, 2008) (noting that Jefferson “predicted
that the South Carolina Supreme Court would recognize that an insurer’s duty of good
faith extends to uninsured . . . motorist coverage”). In short, the Court sees no reason to
stray from Jefferson’s reasoning and finds Defendant’s arguments on the issue
unpersuasive.

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Defendant next argues that even if a bad faith cause of action can exist in UM
coverage cases, the allegations made in the Complaint do not support this cause of
action. (ECF Nos. 23 at 8; 27 at 9.) Specifically, Defendant appears to argue that its
alleged duty to act in good faith and fair dealing was not triggered until after the judgment
was obtained against the at-fault driver and affirmed in state court, and, therefore,
Plaintiff’s allegations as to Defendant’s actions prior to that point should be dismissed.4
This argument, however, has been expressly rejected. In Myers v. State Farm
Mut. Auto. Ins. Co., Judge Blatt considered whether a bad faith claim in the underinsured
motorist (“UIM”) context was prematurely filed. 950 F. Supp. 148, 149 (D.S.C. 1997). The
insurer defendant argued, as Defendant does here, that an insured is required to obtain
a judgment against an at-fault driver before the insured’s carrier’s duty arises to exercise
good faith and deal fairly with the insured regarding underinsured5 benefits. Id.
Judge Blatt rejected this argument and found that South Carolina law established,
at most, that an insurer’s “duty to act in good faith regarding underinsured benefits arises
after the insured brings suit against the at-fault driver and serves the carrier with
process.” Id. at 150. In coming to this conclusion, Judge Blatt considered the same case
law relied on by Defendant here: Williams v. Selective Ins. Co., 446 S.E.2d 402 (S.C.
1994), and Lawson v. Porter, 180 S.E.2d 643 (S.C. 1971). First, he noted that Williams
involved an action against an insurer for breach of contract and bad faith refusal to pay
UIM benefits where the plaintiff failed to pursue an action against the at-fault driver.

4
In the Amended Complaint, Plaintiff alleges that Defendant breached the implied covenant of good faith
and fair dealing by: (1) failing to promptly pay Plaintiff the UM benefits due; (2) failing to properly
investigate or evaluate Plaintiff’s UM claim; (3) failing to engage in settlement negotiations; (4) assessing
Plaintiff’s UM claim as having zero value; (5) advocating various untenable positions in the underlying
action; and (6) continuing to contest Plaintiff’s claim in the underlying action even after Plaintiff was
awarded a jury verdict that was affirmed by the Court of Appeals. (ECF No. 26-1 ¶ 38.)
5
Or, as Defendant argues, uninsured benefits.

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Meyers, 950 F. Supp. at 149–50. The Williams court found summary judgment proper
because the plaintiff did not comply with the state statute requiring that the insured file an
action against the at-fault driver and serve the insurance carrier with process in order to
maintain a claim for UIM benefits. 446 S.E.2d at 404 (citing S.C. Code Ann. § 38-77160). As Judge Blatt correctly noted, Williams did not address the issue of when the
insured may bring a suit against his own carrier for bad faith after bringing suit against
the tortfeasor.
Judge Blatt next distinguished Lawson, finding that the case only required that a
judgment first be obtained against the at-fault driver before an insured can bring an
action ex contractu against the insurance carrier for UM benefits. Myers, 950 F. Supp. at
150 (citing Lawson, 180 S.E.2d at 644). Because the plaintiff in Myers was pursuing a
bad faith action, Lawson was inapplicable. Id. Judge Blatt found support for his findings
in case law from other jurisdictions that considered and rejected the “prematurity”
argument advanced by the defendant. He highlighted these courts’ findings that the duty
of good faith exists when investigating and processing an underinsurance claim and that,
“in cases of liability where it is clear that damages have been suffered by the insured that
are greatly in excess of the tortfeasors’ policy limits, the underinsured carrier may have a
duty to make a settlement offer prior to its insured obtaining a judgment against, or
exhausting the policy limits of, the tortfeasor.” Id. at 151.
Other courts in this district have echoed Myers’ holding, finding that at the least,
an insurer has a duty to act in good faith towards the insured once the insured files a
claim against the at-fault driver. See Auto-owners Ins. Co. v. Woodland Mobile Home

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Park, LLC, No. 6:15-910-HMH, 2015 WL 11027032, at *2 (D.S.C. July 28, 2015)
(following Myers and finding bad faith claim not subject to dismissal where insured had
initiated suit against the at-fault driver, even though underlying suit was ongoing)6;
Hartsock v. Am. Auto. Ins. Co., 788 F. Supp. 2d 447, 452 (D.S.C. 2011) (citing Myers
and stating,  “Since Plaintiff had initiated his action against the at-fault driver and served
all relevant documents from that action upon [the insurer] before initiating this action, the
Court finds that this action is not premature and, therefore, denies Defendant’s motion to
dismiss”); Snyder v. State Farm Mut. Auto. Ins. Co., 586 F. Supp. 2d 453, 458 (D.S.C.
2008) (citing Myers, stating, “once a UIM insured commences a claim for liability against
the allegedly at-fault driver, the UIM insurer has a duty to act in good faith towards the
insured”); Wilkins v. State Farm Mut. Ins. Co., No. C/A 3:06-334-CMC, 2008 WL
2690240, at *8 (D.S.C. July 1, 2008) (“As the Myers line of cases suggests, the duty of
good faith includes, in appropriate cases, a duty to make reasonable efforts to settle the
claim through negotiation, at least after suit is filed against the underinsured or uninsured
motorist.”); Halmon v. Am. Int’l Group, Inc. Ins. Co., 586 F. Supp. 2d 401, 408 (D.S.C.
2007) (following Myers and dismissing plaintiff’s bad faith claim as premature, finding
that the insurer’s duty of good faith had not yet arisen when the bad faith claim was filed
because the insurer had not yet been properly served in the underlying action).
In light of the foregoing case law, the Court rejects Defendant’s assertions that
Plaintiff’s bad faith claim should be dismissed as premature. To the extent Defendant

6
Defendant cites Crowe v. Vaughn, 2008 WL 5114956 (D.S.C. Dec. 2, 2008), an earlier opinion issued by
Judge Herlong, in support of its prematurity argument. In Crowe, Judge Herlong granted an unopposed
motion to dismiss a bad faith claim for UIM benefits, finding the claim improper because the plaintiff had
not yet “obtained a judgment against the alleged tortfeasors.” The Court finds Judge Herlong’s
more recent opinion, Auto-owners Ins. Co. v. Woodland Mobile Home Park, LLC, more persuasive, as it
was based on a briefed motion and discusses the case law on this issue. 2015 WL 11027032, *2.

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argues that its conduct was reasonable, such an argument is not appropriate at this
stage of the case.
Defendant next argues that Plaintiff is not entitled to damages beyond the policy
limits. (ECF Nos. 23 at 9; 27 at 10.) It asserts that the Tyger River doctrine is
inapplicable to the context of UM coverage and Plaintiff therefore cannot claim the
excess judgment in the underlying action as damages. (ECF No. 27 at 10.) The Tyger
River doctrine refers to the South Carolina Supreme Court case which held that an
insured may be entitled to an excess judgment if it was caused by the insurer’s bad faith
refusal to settle or defend a case. Tyger River Pine Co. v. Md. Cas. Co., 170 S.E. 346,
347 (S.C. 1933). According to Defendant, Tyger River only applies where the insurer
assumes the defense of the insured and the insured may potentially be exposed to
liability above and beyond the policy limits. (ECF No. 27 at 10.) Defendant relies on
Snyder for support of this proposition. In Synder, the plaintiff alleged a bad faith claim
against his UIM insurance carrier for both refusal to settle and refusal to pay benefits.
586 F. Supp. 2d at 458. In addressing this claim, the Snyder court found that “[t]he Myers
court stopped well short of imposing upon first-party UIM insurers a duty to settle similar
to the duty imposed upon liability insurers by the South Carolina Supreme Court in Tyger
River.” Id. at 459. However, the court believed there could be a duty to settle, as outlined
in Myers, where “it was clear that the insured suffered damages greatly in excess of the
liability limits of the at-fault party.” Id. (internal quotations omitted). The court ultimately
granted summary judgment on the bad faith claim, finding that the plaintiff failed to

12

establish an issue of material fact on the issue of whether the insurance carrier acted in
bad faith. Id. at 461.
Here, at the dismissal stage, the Court draws no conclusions as to the
reasonableness of Defendant’s conduct as alleged by Plaintiff. While the application of
Tyger River to these facts is not entirely clear, Defendant has not pointed to any
authority that warrants dismissing Plaintiff’s bad faith claim on these grounds. Such a
dispute is better addressed at the summary judgment stage.
Defendant also argues that the excess verdict cannot form the basis of damages
for Plaintiff’s bad faith claim. (ECF No. 27 at 12.) Specifically, it argues that “[s]imply
having to try a case to verdict where there is a debate over the value of the case cannot
constitute the factual basis for a bad faith lawsuit.” (Id. at 17.) In support, Defendant cites
Snyder and Collins. As explained above, in Snyder, the court found that the insurer had
a reasonable ground for contesting the plaintiff’s claim for UIM coverage, and, therefore,
granted summary judgment on plaintiff’s bad faith claim. 586 F. Supp. 2d at 461.
Defendant seems to rely on Snyder for the proposition that a failure to settle can never
support a bad faith claim. However, as explained above, Snyder does not support that
assertion. In Collins, the court similarly found that the insurer had a reasonable ground
for contesting the plaintiff’s claim for coverage and found summary judgment proper on
the plaintiff’s bad faith claim. 759 F. Supp. 2d at 742. Neither of these cases support the
assertion that a bad faith claim cannot, under any circumstances, be based on an
insurer’s failure to settle a claim for coverage. Rather, they demonstrate that a bad faith
claim fails as a matter of law where the insurer’s actions were reasonable. Here, the

13

Court cannot make such a finding at this stage of the litigation. Thus, Defendant’s
assertions that its conduct, as alleged in the Complaint, was reasonable are premature.
There is no basis, at this stage, to find that Defendant’s conduct was reasonable as a
matter of law.
Finally, Defendant argues that Plaintiff’s breach of contract claim fails to establish
a breach of any term in the policy and any resulting damages. (ECF Nos. 23 at 11; 27 at
12.) The amended complaint alleges that Defendant breached the insurance policy by
failing to pay the policy limits at the time demanded, and, instead, litigating the claim
through Plaintiff’s trial against John Doe. Defendant asserts that this allegation cannot
support a breach of contract claim because South Carolina courts have held that
“recovery under the uninsured endorsement is subject to the condition that the insured
establish legal liability on the part of the uninsured motorist.” (ECF No. 27 at 15 (quoting
Collins, 759 F. Supp. 2d at 736). In support, Defendant cites Collins, a UM case where
the court granted summary judgment against plaintiff’s breach of contract claim. 759 F.
Supp. 2d at 742. Collins, however, is inapposite because in that case the court found the
insurer owed nothing under the insurance policy given that the jury in the underlying
action returned a verdict in favor of the uninsured motorist. Id. at 730. Here, Plaintiff
obtained a judgment in his favor in the underlying action, and Defendant refused to
tender the policy limits until six years after Plaintiff originally demanded payment.
To the extent Defendant argues that Plaintiff cannot establish damages under the
breach of contract claim, Plaintiff has pled prejudgment interest on the policy limit from
the time it was first demanded. While Defendant argues that South Carolina does not

14

allow for the recovery of prejudgment interest in a UM case (ECF No. 27 at 19), the
Court finds prejudgment interest potentially recoverable in this type of claim.
As a general rule, prejudgment interest is not recoverable on an unliquidated
claim in the absence of agreement or statute. Builders Transp., Inc. v. S.C. Prop. & Cas.
Ins. Guar. Ass’n, 415 S.E.2d 419, 424 (S.C. Ct. App. 1992). “The law allows prejudgment
interest on obligations to pay money from the time when, either by agreement of the
parties or operation of law, the payment is demandable, if the sum is certain or capable
of being reduced to certainty.” Babb v. Rothrock, 426 S.E.2d 789, 791 (S.C. 1993); see
Builders Transp., Inc., 415 S.E.2d at 424 (“A claim is liquidated if the sum claimed is
certain or capable of being reduced to a certainty.”). “The proper test for determining
whether prejudgment interest may be awarded is whether or not the measure of
recovery, not necessarily the amount of damages, is fixed by conditions existing at the
time the claim arose.” Babb, 426 S.E.2d at 791. A claim will not be considered
unliquidated for purposes of prejudgment interest solely due to a dispute as to the sum
due. Id. A damages dispute hinging on uncertainty of contractual terms renders the sum
due unascertainable. Vaughn Dev., Inc. v. Westvaco Dev. Corp., 642 S.E.2d 757, 759–
60 (S.C. Ct. App. 2007).
Section 34-31-20(A) of the South Carolina Code of Laws provides the statutory
basis for prejudgment interest. This section states: “In all cases of accounts stated and in
all cases wherein any sum or sums of money shall be ascertained and, being due, shall
draw interest according to law, the legal interest shall be at the rate of eight and threefourths percent per annum.” S.C. Code Ann. § 34-31-20(A).

15

Here, the insurance policy’s UM coverage does not specifically provide for
prejudgment interest7 and the UM statute makes no mention of the right to recover
prejudgment interest. Thus, prejudgment interest may only be awarded if, at the time the
policy limit was demanded by Plaintiff, the claim was liquidated or a sum capable of
being reduced to certainty. Plaintiff acknowledges that the insurance policy does not
provide for prejudgment interest, but asserts that prejudgment interest is properly pled
because the “$100,000 sum claim [was] fixed and due” at the time it was demanded.
Plaintiff quotes Varnadore v. Nationwide Mutual Insurance Co., 345 S.E.2d 711, 715
(S.C. 1986), for the proposition that “[a]bsent an express exclusion, insurers who contest
their insureds’ claims unsuccessfully are liable for interest ‘from the date of the loss.’”
(ECF No. 28 at 8–9.)
The Court agrees with Plaintiff that the policy limit was a sum certain at the time it
was originally demanded by Plaintiff. Accordingly, the Court finds prejudgment interest is
potentially recoverable should Plaintiff prove successful on his breach of contract claim. 
See Edens v. S.C. Farm Bureau Mut. Ins. Co., 343 S.E.2d 49, 50 (S.C. Ct. App. 1986)
(“[T]he allowance of prejudgment interest is a matter of discretion.”).8 Plaintiff’s breach of
contract claim therefore does not fail for lack of damages.

7
Under liability coverage, the policy provides: “We will pay damages for ‘bodily injury’ or ‘property damage’
for which any ‘insured’ becomes legally responsible because of an auto accident. Damages include
prejudgment interest awarded against the ‘insured’. (ECF No. 27-1 at 15.) However, no mention of
prejudgment interest is made under the uninsured motorists coverage section. (Id. at 18–20.)
8
Defendant’s arguments to the contrary are without merit. Plaintiff did not need to plead recovery for
prejudgment interest in the John Doe action because this claim is asserted against Defendant, not the atfault driver, and arises out of Defendant’s delayed payment of the policy limits. Defendant offers no South
Carolina case law to dissuade the Court from this finding. 

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CONCLUSION
For the foregoing reasons, it is hereby ORDERED that Defendant’s amended
motion to dismiss (ECF No. 23) is DENIED and Plaintiff’s motion to amend the complaint
(ECF No. 26) is GRANTED.
IT IS SO ORDERED.
/s/Bruce Howe Hendricks
United States District Judge
Greenville, South Carolina
March 3, 2017

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