Weber v. Lewis

Filing 27

ORDER: The Court DENIES Defendant Delilah Lewiss motion [ECF No. 7 ]. Signed by the Honorable R Bryan Harwell on 11/9/2018.(lsut, )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
FLORENCE DIVISION
Jenifer Weber.

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Plaintiff,
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v.
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Delilah Lewis,
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Defendant.
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________________________)

Civil Action No.: 4:18-cv-00239-RBH

ORDER

This matter is before the Court for a ruling on Defendant Delilah Lewis’s motion to compel
arbitration and dismiss the action or, in the alternative, stay the action pending arbitration. See ECF No.
7. The Court denies the motion for the reasons herein.1
Background
In her complaint, Plaintiff Jenifer Weber alleges she was injured in an automobile accident on
May 20, 2016, when Defendant Delilah Lewis crashed into her vehicle on U.S. Highway 501 in Horry
County, South Carolina. See ECF No. 1 at ¶¶ 5–7. Plaintiff is an Illinois citizen, and Defendant is a
South Carolina citizen. Id. at ¶¶ 1–2. Plaintiff asserts two causes of action against Defendant Lewis:
negligence and negligence per se. Id. at ¶¶ 8–14.
At the time of the accident, Plaintiff’s parents maintained an insurance policy through Safeco
Insurance Company of Illinois (“Safeco”) providing underinsured motorist (“UIM”) coverage.2 See
ECF No. 7-2 at pp. 51–56. The Safeco Policy contains an arbitration provision providing that “either
party may make a written demand for arbitration” if Safeco and the insured do not agree to the amount

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The Court decides the motion without a hearing pursuant to Local Civil Rule 7.08 (D.S.C.).

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Plaintiff qualified for UIM coverage under the Safeco Policy as a family member. See ECF No. 7-2 at p.

52.

of damages and that “arbitration will take place in the county in which the insured lives.” Id. at p. 56.
Plaintiff also had additional UIM coverage available under a personal excess liability policy issued by
Federal Insurance Company. See ECF No. 13 at p. 1.
After the accident, Defendant Lewis’s liability insurer tendered its $25,000 liability limits in
exchange for a covenant not to execute. See ECF No. 7-1. Plaintiff then submitted a claim to Safeco
for UIM benefits demanding the policy limits of $250,000, but Plaintiff and Safeco were unable to settle
the claim. ECF No. 13 at p. 3.
On January 30, 2018, Plaintiff filed the instant action against Defendant Lewis in this Court
invoking diversity jurisdiction pursuant to 28 U.S.C. § 1332. See ECF No. 1. Pursuant to S.C. Code
Ann. §§ 15–9–270 and 38–77–160, Plaintiff served the summons and complaint on Safeco and Federal.
ECF No. 13 at p. 3. Pursuant to § 38–77–160,3 counsel for Safeco filed a notice of appearance on
February 21, 2018, and counsel for Federal filed a notice of appearance on March 30, 2018. See ECF
No. 5.
On March 5, 2018, Defendant Lewis filed the instant motion, which is captioned “Defendant
Delilah Lewis’s, By and Through Safeco Insurance Company, Motion to Dismiss and Compel
Arbitration Or, Alternatively, Stay Litigation Pending Arbitration.” See ECF No. 7. Plaintiff filed a
response in opposition to the motion, and Defendant Lewis filed a reply to Plaintiff’s response. See
ECF Nos. 13 & 19.4
Discussion

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Section 38–77–160 provides that “[t]he insurer has the right to appear and defend in the name of the
underinsured motorist in any action which may affect its liability and has thirty days after service of process on it in
which to appear.” S.C. Code Ann. § 38–77–160.
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Federal did not respond to Defendant Lewis’s motion, and it has filed an answer. See ECF No. 11.

2

As mentioned above, Safeco has appeared and is defending in the name of Defendant Delilah
Lewis pursuant to S.C. Code Ann. § 38–77–160, and Defendant Lewis has filed the instant motion “by
and through Safeco Insurance Company.” ECF No. 7 at p. 1. The motion seeks to enforce the
arbitration provision in the Safeco Policy providing UIM coverage and compel arbitration pursuant to
the Federal Arbitration Act.5
Plaintiff contends arbitration cannot be compelled in this action for several reasons. Most
significant is Plaintiff’s argument that Defendant Delilah Lewis—the only named defendant in this
action— cannot compel or enforce arbitration pursuant to the Safeco Policy because Defendant Lewis
herself is not a party to that policy/contract (i.e., that Defendant Lewis has no standing to compel
arbitration). ECF No. 9 at pp. 1–2, 9, 18. The Court agrees with this argument and will therefore deny
Defendant Lewis’s motion.6
“[C]ourts must rigorously enforce arbitration agreements according to their terms, including
terms that specify with whom the parties choose to arbitrate their disputes, and the rules under which
that arbitration will be conducted.” Am. Exp. Co. v. Italian Colors Rest., 570 U.S. 228, 233 (2013)
(internal quotation marks, citations, and brackets omitted). “As a general matter, arbitration is a matter
of contract interpretation and a party cannot be required to submit to arbitration any dispute which he
has not agreed so to submit.” Am. Bankers Ins. Grp., Inc. v. Long, 453 F.3d 623, 626–27 (4th Cir.
2006) (internal quotation marks and brackets omitted).
“A number of courts have held that because the right to compel arbitration derives from a

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9 U.S.C. § 1 et seq.

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In light of its ruling, the Court need not address Plaintiff’s other arguments, including her assertion that she
cannot be compelled to arbitrate because she is a nonparty beneficiary to the Safeco Policy.

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contractual right, one who is not a party to the contract lacks standing to compel arbitration.” Goer v.
Jasco Indus., Inc., 395 F. Supp. 2d 308, 312 (D.S.C. 2005). “It is well-established, however, that a
nonsignatory to an arbitration clause may, in certain situations, compel a signatory to the clause to
arbitrate the signatory’s claims against the nonsignatory despite the fact that the signatory and
nonsignatory lack an agreement to arbitrate.” Am. Bankers, 453 F.3d at 627. “This happens when
theories arising out of common law principles of contract and agency law are used to bind
nonsignatories to arbitration agreements.” R.J. Griffin & Co. v. Beach Club II Homeowners Ass’n, 384
F.3d 157, 160 (4th Cir. 2004) (internal quotation marks omitted). Here, Defendant Lewis asserts
Plaintiff should be equitably estopped from avoiding the Safeco Policy’s arbitration provision.7 See
ECF No. 19 at pp. 4–5.
“[A] signatory to an arbitration agreement may be bound by a nonsignatory through the doctrine
of equitable estoppel.” Brantley v. Republic Mortg. Ins. Co., 424 F.3d 392, 395 (4th Cir. 2005).
“[E]quitable estoppel allows a nonsignatory to compel arbitration in two different circumstances”: when
a signatory to the agreement with the arbitration clause (1) “must rely on the terms of the written

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Plaintiff also argues she cannot be compelled to arbitrate because she (Plaintiff) is not a party to the Safeco
Policy but merely a beneficiary. See ECF No. 13 at pp. 8–9. Defendant’s equitable estoppel argument primarily
focuses on this argument. See ECF No. 19 at pp. 4–6.
As noted above, the Court is addressing Plaintiff’s separate argument that Defendant Delilah Lewis (not
Plaintiff) is a nonparty to the Safeco Policy. Defendant Lewis only briefly addresses this argument in a footnote in
its reply, arguing that “just because the lawsuit is captioned against Lewis does not foreclose Safeco from appearing
and defending its rights under the contract for insurance.” ECF No. 19 at p. 5 n.2. Although Defendant Lewis
appears to argue that S.C. Code Ann. § 38–77–160 should allow it to seek enforcement of the arbitration provision,
Defendant Lewis has not cited any cases specifically supporting that argument. Moreover, the Court notes
§ 38–77–160 simply permits a UIM carrier such as Safeco to “appear and defend in the name of the underinsured
motorist in any action which may affect its liability.” S.C. Code Ann. § 38–77–160 (emphasis added). Safeco
itself is not a party to this lawsuit; Defendant Lewis is not a party to the Safeco Policy containing the arbitration
provision; and therefore enforcement of the arbitration provision is inappropriate in light of the procedural posture
of this case.
The Court also notes that Safeco is not a named party to this negligence action, has not filed a separate
action seeking to enforce the arbitration provision, and has not provided any authority supporting the proposition that
this Court could order arbitration simply because Safeco is a UIM carrier.

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agreement in asserting its claims against the nonsignatory” or (2) “raises allegations of substantially
interdependent and concerted misconduct by both the non-signatory and one or more of the signatories
to the contract.” Id. at 395–96 (internal quotation marks, brackets, and ellipsis omitted). “Because this
legal test examines the nature of the signatory’s underlying allegations against the nonsignatory, courts
should examine the underlying complaint to determine whether estoppel should apply.” Am. Bankers,
453 F.3d at 627. “[E]stoppel is appropriate if in substance the signatory’s underlying complaint is based
on the nonsignatory’s alleged breach of the obligations and duties assigned to it in the [arbitration]
agreement, regardless of the legal label assigned to the claim.” Id. at 628 (internal quotation marks,
original brackets, and citations omitted).
In this case, neither of the above two circumstances is present. First, Plaintiff is not relying on
the terms of the Safeco Policy in asserting her claims of negligence and negligence per se against
Defendant Delilah Lewis. Second, Plaintiff’s complaint does not allege any collusion or misconduct
by Defendant Lewis (a nonsignatory) and Safeco (a signatory). Plaintiff’s negligence claims are based
entirely on alleged conduct by Defendant Delilah Lewis, have nothing to do with the Safeco Policy (or
the arbitration provision therein), and “would exist absent any contract at all.” Weckesser v. Knight
Enterprises S.E., LLC, 735 F. App’x 816, 823 (4th Cir. 2018); see, e.g., id. at 822–24 (affirming the
district court’s decision not to apply equitable estoppel because the plaintiff’s claims did “not depend
on any provision” of the arbitration agreement); Brantley, 424 F.3d at 396 (affirming the district court’s
decision that equitable estoppel was inapplicable because “the plaintiffs’ claim is based entirely on
actions taken by . . . a nonsignatory to the arbitration agreement”). Thus, the Court cannot compel
arbitration in the instant lawsuit through the use of equitable estoppel.
Conclusion
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For the foregoing reasons, the Court DENIES Defendant Delilah Lewis’s motion [ECF No. 7].
IT IS SO ORDERED.

Florence, South Carolina
November 9, 2018

s/ R. Bryan Harwell
R. Bryan Harwell
United States District Judge

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