Rolf Kamp v. Empire Fire and Marine Insuran , 570 F. App'x 350 ( 2014 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 13-1613
ROLF KAMP,
Plaintiff – Appellant,
v.
EMPIRE FIRE AND MARINE INSURANCE COMPANY,
Defendant – Appellee.
Appeal from the United States District Court for the District of
South Carolina, at Rock Hill. Joseph F. Anderson, Jr., District
Judge. (0:12-cv-00904-JFA)
Argued: March 18, 2014 Decided: May 7, 2014
Before WILKINSON, MOTZ, and DIAZ, Circuit Judges.
Affirmed by unpublished per curiam opinion.
ARGUED: Ashley White Creech, MCGOWAN, HOOD & FELDER, LLC, Rock
Hill, South Carolina, for Appellant. Theodore David Rheney,
GALLIVAN, WHITE & BOYD, P.A., Greenville, South Carolina, for
Appellee. ON BRIEF: Chad A. McGowan, MCGOWAN, HOOD & FELDER,
LLC, Rock Hill, South Carolina, for Appellant. Jennifer D.
Eubanks, GALLIVAN, WHITE & BOYD, P.A., Greenville, South
Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Rolf Kamp sued Empire Fire and Marine Insurance Company
seeking insurance coverage for injuries he suffered in an
accident caused by an uninsured motorist. The district court
determined that the policy at issue did not include the coverage
Kamp sought and granted summary judgment for Empire. We agree
with the district court and therefore affirm.
I.
A.
On April 8, 2011, Kamp rented a motorcycle from R&K Harley-
Davidson, Inc., in Charlotte, North Carolina. Through the
written rental agreement, which Kamp signed, he automatically
received automobile insurance coverage up to the minimum limits
required by North Carolina law. Kamp separately purchased
supplemental insurance, which provided coverage beyond the
minimum limits. Both the minimum-coverage policy and the
supplemental policy were issued by Empire.
Later that same day, while driving the motorcycle in South
Carolina, Kamp was involved in an accident. Another driver
turned left in front of him, striking his motorcycle and
severely injuring him. The driver who caused the accident was
uninsured. Kamp sued her in South Carolina state court and
eventually obtained a $2,500,000 default judgment. He then
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filed an insurance claim with Empire, seeking uninsured motorist
(“UM”) coverage under both the minimum-coverage and supplemental
policies. Empire paid Kamp $30,000 in accordance with the
minimum-coverage policy, but denied any additional coverage
under the supplemental policy. According to Empire, the
supplemental policy excluded UM coverage.
B.
Because this case turns on the scope of the coverage
offered by Empire in the two policies, we briefly summarize the
relevant documents and provisions.
Empire issued the minimum-coverage and supplemental
policies to Harley-Davidson Financial Services, Inc. Separate
documents extend each policy to R&K, the North Carolina-based
franchise from which Kamp rented the motorcycle. Under the
minimum-coverage policy, R&K rentees automatically receive
liability insurance coverage up to the minimum limits required
by North Carolina law: $30,000 per person for bodily injury;
$60,000 per accident for bodily injury; and $25,000 per accident
for property damage. Rentees receive equal amounts of UM
coverage. At issue in this case is the supplemental policy,
which offers additional coverage beyond what the minimum-
coverage policy provides.
The supplemental policy includes three categories of
coverage: Supplemental Rental Liability Insurance (“SLI”);
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Personal Accident Coverage; and Personal Property Coverage. A
rentee may purchase coverage under any or all of these
categories by paying an associated premium. Kamp purchased all
three, and he contends that the SLI category includes up to
$1,000,000 in additional UM coverage.
The supplemental policy’s terms are set out in three
component documents. The first is a master document, titled
“Policy Provisions,” and it applies nationwide. With respect to
SLI, the master document states that the policy “provides excess
auto liability insurance and only applies to a loss involving
bodily injury and property damage caused by an accident and
resulting from the use of a covered rental vehicle.” J.A. 63
(internal quotation marks omitted). The master document further
states that “the most [Empire] will pay for ‘ultimate net loss’
is the difference between the limits of liability provided by
the ‘underlying insurance’ 1 and the [SLI] limit shown in the
Declarations.” Id. at 64. A separate provision in the master
document expressly excludes coverage for “[l]iability arising
out of or benefits payable under any uninsured or underinsured
motorists law, in any state.” Id.
1
“Underlying insurance” refers to the separate minimum-
coverage policy, which provides the minimum amounts of coverage
required by law. See J.A. 68.
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The second component of the master document is the
“Declarations,” which detail the specific coverage limits for
each category of coverage. Within the SLI category, the
Declarations list limits of $1,000,000 for both “Bodily Injury
and Property Damage Liability” and “Uninsured/Underinsured
Motorist Coverage.” Id. at 57. The Declarations specify that
the premium for each of these coverages is “PER CERT.” 2 Id.
State-specific endorsements, the final component of the
supplemental policy, modify the master document as it applies to
particular states. The endorsement for North Carolina
(applicable to R&K) does not include any modifications relevant
to this appeal, nor does it mention UM coverage. Endorsements
for six other states, however, purport to “add[]” to or
“modif[y]” the master document by providing UM coverage. See,
e.g., id. at 125 (“Florida Endorsement Adding
Uninsured/Underinsured Motorist Coverage to Supplemental
Liability Insurance Policy”). According to Empire, these six
states--Florida, Louisiana, New Hampshire, North Dakota,
Vermont, and West Virginia--“all require [that] UM coverage be
offered in connection with an excess liability policy.”
2
The parties agree that this notation refers to
certificates of insurance, the separate documents that extend
the supplemental policy to individual Harley-Davidson
franchises.
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Appellee’s Br. at 25. Accordingly, Empire asserts, the
endorsements modify the master document (which Empire contends
does not generally include UM coverage) to make the policy
compliant with the respective state laws. The limit for UM
coverage in these endorsements is generally the same $1,000,000
limit listed in the Declarations, but a few, such as North
Dakota’s, specify lower limits. Each of the six endorsements
expressly overrides the master document’s UM-related exclusion.
Individual Harley-Davidson franchises become policyholders
of the supplemental policy through certificates of insurance.
R&K’s certificate states that it “neither affirmatively nor
negatively amends, extends or alters the coverage provided by
the [supplemental policy],” and further provides as follows:
[R&K] is an additional Policyholder under [the
supplemental policy] for the following
coverages/limits[:] . . .
Supplemental Liability Insurance[:]
Excess Auto Liability[:] $1,000,000.
J.A. 53. Additionally, the certificate states that “the maximum
Limit of Liability for the Supplemental Rental Liability
Coverage is the difference between the Limit of Liability
indicated on the Declarations and the [minimum-coverage
policy].” Id. at 53-54. The certificate does not expressly
mention UM coverage.
C.
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After Empire denied Kamp’s claim for UM coverage under the
supplemental policy, Kamp sued Empire in South Carolina state
court. Kamp’s complaint alleged that Empire breached the
supplemental policy by refusing to pay him UM benefits up to
$1,000,000. Invoking diversity jurisdiction, Empire removed the
case to the U.S. District Court for the District of South
Carolina.
The parties engaged in discovery and filed cross-motions
for summary judgment. Relying on the master document’s
reference to the Declarations, Kamp asserted that the
supplemental policy unambiguously provides him $1,000,000 in UM
coverage. And even if the policy is ambiguous, he argued, North
Carolina rules of construction require resolving any ambiguity
in his favor. Alternatively, Kamp contended that North
Carolina’s Motor Vehicle Safety and Financial Responsibility Act
(the “MVSFRA”) requires reformation of the policy to include the
coverage. Empire, on the other hand, argued that Kamp was not
entitled to UM coverage because no such coverage was provided by
the North Carolina endorsement. Empire further argued that the
MVSFRA did not apply.
The district court granted summary judgment for Empire.
See Kamp v. Empire Fire & Marine Ins. Co., No. 3:12-cv-904-JFA,
2013 WL 310357 (D.S.C. Jan. 25, 2013). Citing the exclusion
clause in the master document, the court held that the
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supplemental policy “unambiguously excludes UM coverage.” Id.
at *5. The court acknowledged that the Declarations include a
$1,000,000 limit for UM coverage, but it determined that this
limit is merely a maximum. As such, the court concluded, it
pertains only to those states for which a state-specific
endorsement expressly provides UM coverage. In the court’s
view, this understanding of the policy was consistent with the
master document’s description of the limits in the Declarations
as representing “the most [Empire] will pay.” See J.A. 64
(emphasis added). As neither the North Carolina endorsement nor
R&K’s certificate mentions UM coverage, the court concluded that
Kamp was not entitled to it.
The court also observed that Kamp’s construction of the
supplemental policy would extend $1,000,000 of UM coverage to
all rentees, in every state. In the court’s view, this reading
failed to account for the varying UM coverage provisions of the
state-specific endorsements. For example, a reading of the
master document extending $1,000,000 in UM coverage to every
rentee would conflict with the North Dakota endorsement
providing UM coverage only for a lesser amount. By contrast,
when the supplemental policy is read to generally exclude UM
coverage, “there is no inconsistency in this or any other state-
specific situation.” Kamp, 2013 WL 310357, at *6. This
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consideration, the court held, “resolve[s]” “[a]ny perceived
ambiguity in the contract.” Id.
Finally, rejecting Kamp’s alternative argument, the
district court declined to reform the supplemental policy
pursuant to the MVSFRA, which requires certain insurance
policies to offer UM coverage in equal amounts with general
liability coverage. See N.C. Gen. Stat. §§ 20-279.21(a),
(b)(3). Relying on the text of the statute, as well as North
Carolina case law, the court determined that the MVSFRA applies
only to an underlying insurance policy that satisfies the
state’s minimum-coverage requirements, not to an excess
liability policy like the supplemental policy here.
Kamp appealed, arguing that the district court misconstrued
both the supplemental policy and the MVSFRA. We have
jurisdiction pursuant to 28 U.S.C. § 1291.
II.
We review the district court’s order granting summary
judgment de novo, “viewing the facts and the reasonable
inferences therefrom in the light most favorable to [Kamp].”
Bonds v. Leavitt, 629 F.3d 369, 380 (4th Cir. 2011). Summary
judgment is appropriate when “there is no genuine dispute as to
any material fact and the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(a).
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A.
Because our jurisdiction in this case derives from
diversity of citizenship, we apply South Carolina’s choice-of-
law rules. See CACI Int’l, Inc. v. St. Paul Fire & Marine Ins.
Co., 566 F.3d 150, 154 (4th Cir. 2009). In a contract dispute,
South Carolina law requires courts to apply the substantive law
of the place where the contract was made. See Unisun Ins. Co.
v. Hertz Rental Corp., 436 S.E.2d 182, 184 (S.C. Ct. App. 1993).
Based on these principles, the parties agree that North Carolina
law governs construction of the supplemental policy.
Under North Carolina law, “courts must examine [an
insurance] policy from the point of view of a reasonable
insured.” Register v. White, 599 S.E.2d 549, 553 (N.C. 2004).
“Where the immediate context in which words are used is not
clearly indicative of the meaning intended, resort may be had to
other portions of the policy and all clauses of it are to be
construed, if possible, so as to bring them into harmony.” Id.
(internal quotation marks omitted). Ambiguous coverage
provisions “must be construed liberally so as to afford coverage
whenever possible by reasonable construction.” See N.C. Farm
Bureau Mut. Ins. Co. v. Stox, 412 S.E.2d 318, 321 (N.C. 1992).
Conversely, ambiguous “exclusionary provisions . . . will be
construed against the insurer.” Id. A policy’s terms are
ambiguous when they are “fairly and reasonably susceptible to
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either of the constructions for which the parties contend.”
Wachovia Bank & Trust Co. v. Westchester Fire Ins. Co., 172
S.E.2d 518, 522 (N.C. 1970).
B.
After having the benefit of oral argument and carefully
reviewing the briefs, record, and controlling legal authorities,
we conclude that the district court’s analysis was correct. As
the district court’s order thoroughly explained, Kamp’s proposed
construction of the supplemental policy is incompatible with the
state-specific endorsements. Six of these endorsements, after
all, purport to “modif[y]” or “add[]” to the master document by
providing the same UM coverage that Kamp contends it already
includes. Only Empire’s reading of the policy “bring[s] . . .
into harmony” all of its clauses. See Register, 599 S.E.2d at
553. Accordingly, we conclude that the supplemental policy
unambiguously excludes UM coverage as applied to Kamp.
Moreover, because North Carolina’s MVSFRA does not apply to
policies, like this one, that provide only excess liability
coverage, no reformation of the supplemental policy is required.
See Progressive Am. Ins. Co. v. Vasquez, 515 S.E.2d 8, 13 (N.C.
1999) (“Where there are separate and distinct excess liability
and underlying policies, [UM] coverage is not written into the
excess liability policy by operation of law and exists only if
it is provided by the contractual terms of the excess policy.”);
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see also Piazza v. Little, 515 S.E.2d 219, 220 (N.C. 1999) (per
curiam) (same).
In sum, we agree with the district court’s determination to
award Empire summary judgment.
III.
The district court’s judgment is therefore
AFFIRMED.
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