SC Property v. Brock , 410 S.C. 361 ( 2014 )

THE STATE OF SOUTH CAROLINA
In The Supreme Court
South Carolina Property and Casualty Insurance
Guaranty Association, Appellant/Respondent,
v.
Roger Brock, Ryan Stevens, Malachi Sanders and Health
Advantage/BCBS of Arkansas, Defendants,
Of whom Roger Brock is the Respondent/Appellant.
Appellate Case No. 2013-000402
Appeal from Charleston County,
R. Markley Dennis, Jr., Circuit Court Judge
Opinion No. 27458
Heard April 2, 2014 – Filed October 29, 2014
AFFIRMED IN PART, REVERSED IN PART
Howard A. VanDine, III, A. Mattison Bogan, Erik T.
Norton and Tara C. Sullivan, all of Nelson Mullins Riley
& Scarborough, LLP, of Columbia, for Appellant/
Respondent.
Andrew D. Gowdown and Timothy J.W. Muller, of
Rosen, Rosen & Hagood, LLC, of Charleston, for
Respondent/Appellant.
JUSTICE PLEICONES: This appeal concerns the construction and application of
the South Carolina Property and Casualty Insurance Guaranty Association Act (the
Act), S.C. Code Ann. §§ 38-31-10 to -170 (2002 and Supp. 2013), and specifically
the exhaustion/non-duplication provision in section 38-31-100(1). Roger Brock
(Brock) was a passenger in a car involved in a wreck and sustained severe injuries.
Brock settled his claim, but before payment was made, the insurance carrier
responsible for the claim was declared insolvent and the claim was assumed by the
South Carolina Property and Casualty Insurance Guaranty Association (Guaranty).
Guaranty and Brock moved for summary judgment on the issue whether Guaranty
may offset payments from solvent insurance carriers against Brock's settlement
under section 38-31-100. The circuit court found section 38-31-100 was
ambiguous and granted partial summary judgment to both parties, holding that
Guaranty may offset some but not all of the benefits received by Brock from
solvent insurance carriers. We disagree that section 38-31-100 is ambiguous and
hold that the unambiguous language of section 38-31-100 provides that Guaranty
may offset all payments from all solvent insurers made to Brock as a result of this
wreck.
FACTS
Brock was passenger in a vehicle driven by Brian Mason (Mason), which was
involved in an accident with a logging truck, driven by Ryan Stevens (Stevens). 1
At the time of the accident, Stevens was insured through the owner of the logging
truck, Malachi Sanders's (Sanders), policy issued by Aequicap Insurance Company
(Aequicap).
Brock sustained severe injuries as a result of the wreck and filed suit. Soon after
the litigation began, Brock settled his claim against Stevens and Sanders with
Aequicap for $185,000 for the release of all claims.
Shortly after the settlement was reached but before Brock received any payment,
Aequicap was declared insolvent. Because Aequicap was an insurer licensed to do
business in the State of South Carolina and the insured was a resident of South
Carolina, the claim was referred to Guaranty. As a result, Brock made demand on
Guaranty for payment of the full settlement amount of $185,000.2
1
Mason and Stevens were found to be jointly responsible for the wreck.
2
See §§ 38-31-10 to 38-31-60.
As a result of the wreck, Brock received the following amounts directly from or
paid on his behalf by solvent insurers:
a. Liability Coverage from Nationwide Ins. Co.
(Mason's Policy) $22,500.00
b. Payments for the provision of medical care by Health Advantage/BCBS of
Arkansas
(Brock's private pay medical insurance carrier) $40,590.45
c. Uninsured Motorist coverage from Progressive Ins. Co.
(resident relative coverage through Brock's parents' carrier) $25,000.003
d. Personal Injury Protection from Progressive Ins. Co.
(resident relative coverage through Brock's parents' carrier) $5,000.00
Total: $93,090.45
In the trial court, Guaranty asserted entitlement to offset all payments from the
solvent insurers pursuant to section 38-31-100(1). As a result, Guaranty paid Brock
$91,909.55, the difference between the settlement amount ($185,000) and the
offset amount ($93,090.45). Brock alleged that he was entitled to the remaining
$93,090.45, arguing that this would not lead to duplicative recovery. The circuit
court found that section 38-31-100(1) was ambiguous, and held that Guaranty
could not offset the benefits received under Mason's policy or the amount paid by
Brock's medical insurance. The court did allow offset of the uninsured motorist
(UM), and personal injury protection (PIP) benefits. As a result, the court ordered
Guaranty to pay Brock an additional $63,090.45.
STANDARD OF REVIEW
The parties agree that the issue is solely one of statutory interpretation. “Questions
of statutory interpretation are questions of law, which we are free to decide without
any deference to the court below.” CFRE, LLC v. Greenville Cnty. Assessor, 395
S.C. 67, 74, 716 S.E.2d 877, 881 (2011).
3
This uninsured motorist coverage was triggered by Aequicap's insolvency which
rendered Stevens an uninsured motorist.
DISCUSSION
This case is one of first impression and concerns the construction and application
of the Act's exhaustion provision, section 38-31-100(1).
Guaranty is an unincorporated, non-profit legal entity. Because Guaranty is a
creature of statute, its duties, liabilities, and obligations are controlled by the terms
and conditions set forth in the Act. § 38-31-60. Pursuant to the Act, Guaranty must
pay certain "covered claims," as the term is defined in section 38-31-20(8). 4 As a
condition precedent to recovery from Guaranty, a claimant is required to first
exhaust all available coverage from solvent insurers, and Guaranty is allowed to
offset the full limits of such other coverage against its obligations under the Act. §
38-31-100.
Both parties agree that the $185,000 settlement entered into by Aequicap qualifies
as a "covered claim" for which Guaranty is responsible under section 38-31-20(8).
The parties disagree on what types of insurance coverage Guaranty may offset
against its obligation to pay the $185,000. The exhaustion provision provides in
relevant part:
A person, having a claim under an insurance policy, whether or not it
is a policy issued by a member insurer, and the claim under such other
policy arises from the same facts, injury, or loss that gave rise to the
covered claim against the association, is required to first exhaust all
coverage and limits provided by any such policy. Any amount payable
on a covered claim under this chapter must be reduced by the full
limits of such other coverage as set forth on the declarations page and
the association shall receive a full credit for such limits, or, where
there are no applicable limits, the claim must be reduced by the total
recovery. Notwithstanding the foregoing, no person may be required
to exhaust all coverage and limits under the policy of an insolvent
insurer.
§ 38-31-100(1) (emphasis supplied).
4
A "covered claim" is "an unpaid claim . . . which arises out of and is within the
coverage and is subject to the applicable limits of an insurance policy to which this
chapter applies. . . ." § 38-31-20(8).
Brock contends the circuit court erred in permitting Guaranty to offset any of the
insurance benefits. Conversely, Guaranty contends the circuit court erred by
holding that Guaranty was not able to offset the proceeds of Mason's policy and the
amount of medical insurance benefits provided to Brock. We agree with Guaranty
that the Act unambiguously provides that Guaranty may offset all the proceeds
received by Brock in this case.
“All rules of statutory construction are subservient to the one that legislative intent
must prevail if it can be reasonably discovered in the language used, and that
language must be construed in light of the intended purpose of the statute.”
McClanahan v. Richland Cnty. Council, 350 S.C. 433, 438, 567 S.E.2d 240, 242
(2002). “What a legislature says in the text of a statute is considered the best
evidence of the legislative intent or will. Therefore, the courts are bound to give
effect to the expressed intent of the legislature.” Id. Thus, we must follow the plain
and unambiguous language in a statute and have “no right to impose another
meaning.” Id.Applying section 38-31-100(1), Brock received payments under the medical, UM,
and PIP insurance coverages, as well as from Mason's policy. These claims were
paid "under an insurance policy," and the claims arise from "the same facts, injury
or loss" that gave rise to the $185,000 settlement. Thus, this $185,000 covered
claim should, under § 38-31-100(1), be offset by the full limits of these policies.
As we find section 38-31-100(1) unambiguous, the trial court erred in turning to
other jurisdictions' applications of their own provisions.5 We also disagree with
Brock and the ruling below that allowing set-off in this case offends the "collateral
source rule."
The trial court and Brock misconstrue the applicability of the collateral source rule.
The collateral source rule provides that a tortfeasor has no right to any mitigation
of damages because of payment or compensation received by the injured person
from a source wholly independent of the wrongdoer. Johnston v. Aiken Auto Parts,
311 S.C. 285, 428 S.E.2d 737 (Ct. App. 1993). This scenario is not comparable to
the traditional application of the collateral source rule, since Guaranty is neither the
wrongdoer nor the insurer of a wrongdoer, but is instead a statutory entity that
5
Moreover, the jurisdictions which have found their statutes to be ambiguous have
statutes that contain different language than section 38-31-100(1). Compare Utah
Code § 31A-28-213 (Supp. 2008) and 8 V.S.A § 3619(a) (2013) with § 38-31-
100(1).
exists to provide some protection for the insureds of insolvent insurance
companies. See S.C. Prop & Cas. Ins. Guar. Ass'n v. Carolinas Roofing & Sheet
Metal Contractor's Self-Insurers Fund, 303 S.C. 368, 369, 401 S.E.2d 144, 145
(1991) ("The Guaranty Association's function is to provide protection for insureds
in the event their insurance carriers become insolvent."). Therefore, we do not
agree with the circuit court or Brock that allowing Guaranty to offset the payments
from solvent insurers in this case would effectively permit a tortfeasor to benefit
from the victim's decision to carry insurance and violate the collateral source rule. 6
Finally, we note that on appeal, Guaranty argues it should be entitled to an offset of
the policy limit of $25,000 from Mason's liability insurance policy rather than the
$22,500 that Brock accepted. 7 This offset would be permitted under our reading of
section 38-31-100(1), since it provides that "the covered claim under this chapter
must be reduced by the full limits of such other coverage . . . and [Guaranty] will
receive full credit for such limits." However, in the circuit court, Guaranty asserted
it was seeking to offset only $22,500 in liability coverage and not the full policy
limits.8 Thus, the argument that Guaranty may offset the full $25,000 is not
preserved since it was not raised below. Nationwide Mut. Ins. Co. v. Hunt, 327
S.C. 89, 488 S.E.2d 339 (1997). Therefore, Guaranty is entitled to set-off only
$22,500 in liability coverage. Accordingly, we reverse the circuit court and hold
that Guaranty is entitled to offset the full $93,090.45 paid by solvent insurers.
AFFIRMED IN PART, REVERSED IN PART.
TOAL, C.J., BEATTY, KITTREDGE and HEARN, JJ., concur.
6
The circuit court held that allowing set-off of the medical insurance benefits
would effectively penalize Brock for carrying medical insurance. To the contrary,
Brock was not prohibited from using the cost of medical care he received as a
component of his damages in arriving at the negotiated settlement. Thus, in
establishing his damages, Brock was not penalized by his procurement of medical
insurance, the danger sought to be guarded against by the collateral source rule.
7
This is the only coverage for which Guaranty argues it is entitled to offset more
than Brock actually received.
8
If Guaranty were seeking offset of the full $25,000 limit of the policy below, it
would have only paid Brock $89,409.45, which would have reflected the $25,000
offset plus the other benefits received under the medical, PIP, and UM coverage.