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TIPS: a Torts, Insurance and Products blog

Weekly insights and updates from Nexsen Pruet's TIPS attorneys


Editor: Cheryl D. Shoun

Recently, the United States District Court in South Carolina, 2019 WL 689545, dismissed a claim seeking a declaratory judgment that an insurer failed to settle an underlying tort claim. Briefly, plaintiff Church Creek Construction, LLC incurred a substantial judgment in state court. Church Creek assigned its bad faith claims to the tort plaintiffs, and the tort plaintiffs initiated an action against Church Creek’s insurers. After some procedural realignment, the insurers moved to dismiss several causes of action, including a claim for a declaratory judgment that the insurer negligently failed to settle the underlying claim within the policy limits.

It is well established that an insurance policy is a contract, requiring each party to comply with its respective obligations thereunder. The scope of those obligations, the determination of compliance and any consequence is frequently high stakes – oftentimes leaving one party or the other facing substantial exposure. Because of the critical nature of the relationship between insurer and insured, our courts continue efforts to examine parties’ respective duties and what constitutes fulfillment of those obligations. Further guidance was recently offered by the Fourth Circuit Court of Appeals in Founders Insurance Company v. Richard Ruth’s Bar & Grill, LLC, et al., 2019 WL 852137 (February 21, 2019).

Discovery is a critical part of most cases. Some law firms have entire sections dedicated solely to discovery. Some attorneys enjoy the quest for more information while others find discovery to be the bane of their existence. Whatever your position, it is helpful to receive guidance from the court, which the United States District Court for South Carolina provided in Adelman v. Coastal Select Insurance Company, 2019 WL 465600 (February 2, 2019).

In South Carolina, as in most jurisdictions, unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are unlawful. See South Carolina Unfair Trade Practices Act (the “Act”), S.C. Code Ann. §39-5-10, et seq. In order to be actionable, an act must be unfair or deceptive, and must have an impact upon the public interest. Impact on public interest may be established if the act or practice has the potential for repetition. Potential for repetition may be demonstrated by showing the same kind of action previously occurred, making it likely it will continue to occur without deterrence, or by showing a company’s procedures create the potential for repetition of the unfair and deceptive act. While myriad cases have addressed, interpreted and applied the Act, few have as succinctly dealt with whether acts incapable of repetition may be said to have potential for repetition as the recent case of Turner v. Kellett, 2019 WL 455101 (February 6, 2019).