By, J. Andrew Yoho, Esq.
In a extensively anticipated opinion within the building defect and insurance coverage protection world, the South Carolina Supreme Court docket lately reaffirmed its longstanding legislation on litigating protection points individually from legal responsibility and rebuffed the efforts of insurance coverage carriers to invade the province of legal responsibility actions pending in opposition to their insureds.
For a number of a long time, it has been a bedrock of South Carolina legislation that legal responsibility actions, notably within the building defect context, are tried individually from any protection dispute that arises therefrom. Within the landmark case of Sims v. Nationwide Mut. Ins. Co., 247 S.C. 82, 85 145 S.E.second 523, 524 (1965), the Supreme Court docket established a dichotomy between actions to find out legal responsibility and people concerning the obligation to indemnify discovering it troublesome for an insured to combat a two-front battle of defending legal responsibility and looking for to ascertain protection in the identical motion. The Sims Court docket additionally acknowledged the clear battle when an insurer offers a protection, however concurrently seeks to litigate protection to alleviate its obligations below the obligation to indemnify. Id.
Regardless of this clear and reasoned precept of legislation, lately insurers have sought to make use of the very apply Sims cautioned in opposition to. Underneath tortured readings of dicta from two South Carolina Supreme Court docket opinions, insurers reasoned that absent some type of intervention in a defect motion, their capability to allocate between lined and uncovered damages in a subsequent declaratory judgment motion could be foreclosed. What adopted was a nightmare of insurer motions to intervene, appeals, and unusual bedfellows of plaintiff and protection counsel decrying the impacts of such intervention.
In Ex parte Builders Mut. Ins. Co., 431 S.C. 93, 847 S.E.second 87 (2020) (the
“Palmetto Pointe Case”), the Supreme Court docket stepped into the fray and as soon as extra reaffirmed the firewall between legal responsibility and protection actions in South Carolina. The Palmetto Pointe Case introduced the Court docket what had turn into an all-too typical scenario in South Carolina, after years of litigation and numerous depositions, on the eve of trial, a bevy of insurers moved to intervene “for the restricted objective of taking part within the preparation of a particular verdict kind or a common verdict kind accompanied by solutions to interrogatories for [ ] submission to the jury throughout trial.” Id. at 98, 847 S.E.second 89. The Court docket decided this apply was nothing greater than effort to drive Plaintiffs to itemize the injury in opposition to every insured so as to decide what damages have been lined. Id. at 98, 847 S.E.second 90.
In affirming the trial court docket’s denial of the motions to intervene in Palmetto Pointe, the Supreme Court docket defined that the insurer’s efforts to intervene have been wanting because the insurers didn’t have a “direct curiosity within the building defect ligation” and couldn’t intervene directly or prejudice to the unique events. Id. at 98-100, 847 S.E.second 90-91. The Court docket then outlined why insurer-intervention is illogical and unwarranted.
Allowing the insurers to intervene and introduce particular verdict kinds would in essence shift the burden of proof of disputing protection between the insured and the insurer onto the Plaintiff who could be tasked with the heightened burden of itemizing its damages into insurer-defined classes. Id. at 102, 847 S.E.second at 91. Additional, the Court docket decided that even when intervention is permitted, the court docket would keep its discretion over introducing the insurer requested verdict kinds, which might undoubtedly result in pre-trial appeals over verdict kinds and grind the case to a halt. Id. at 102-103, 847 S.E.second at 92. The Court docket discovered such a framework pointless and prejudicial to Plaintiffs and their capability to current their case with out the interjection of extraneous protection points.
Finally, the Supreme Court docket disposed on the Insurer’s efforts and corrected their misapplication of current case legislation and held that no South Carolina case legislation mandated intervention nor forecloses a declaratory judgment motion to resolve a protection dispute. Id. at 106, 847 S.E.second at 94. The Court docket reaffirmed Sims and held as soon as and for all that an insurer has the “proper and talent to contest protection of the jury verdict in a subsequent declaratory judgment motion.” Id. at 110-11, 847 S.E.second at 96. As soon as extra, the firewall that protected Plaintiffs and Insureds from extraneous and prejudicial protection questions in a legal responsibility motion was bolstered and insurers have been once more restricted to the declaratory judgment realm to contest protection.
In so ruling, the Supreme Court docket additionally set forth a framework for a way, in gentle of its ruling, declaratory judgment actions to contest protection ought to proceed. An in depth evaluation of that framework would be the topic of future weblog posts. Within the meantime, you probably have any questions on learn how to navigate the Palmetto Pointe Opinion and its impression on building defect issues in South Carolina please don’t hesitate to contact our agency.
