Nancy Morris v. State Fiscal Accountability Authority ( 2023 )

THIS OPINION HAS NO PRECEDENTIAL VALUE. IT SHOULD NOT BE
CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING
EXCEPT AS PROVIDED BY RULE 268(d)(2), SCACR.
THE STATE OF SOUTH CAROLINA
In The Court of Appeals
Nancy Morris, as Personal Representative of the Estate of
David Allen Woods, Appellant,
v.
State Fiscal Accountability Authority, South Carolina
Insurance Reserve Fund, Andrew J. Bland, Richard T.
Burkholder, Leenon E. Carner, Priscilla Bland, and Jerry
Speissegger, Jr., Respondents.
Appellate Case No. 2020-000719
Appeal From Richland County
Alison Renee Lee, Circuit Court Judge
Unpublished Opinion No. 2023-UP-201
Heard May 2, 2023 – Filed May 24, 2023
Withdrawn, Substituted and Refiled October 18, 2023
AFFIRMED
Garrett Brendan Johnson, of Elrod Pope Law Firm, of
Rock Hill; and Thomas J. Rode, of Thurmond Kirchner
& Timbes, P.A., of Charleston, both for Appellant.
Andrew F. Lindemann, of Lindemann Law Firm, P.A., of
Columbia, for Respondents State Fiscal Accountability
Authority and South Carolina Insurance Reserve Fund.
PER CURIAM: In this declaratory judgment action, Nancy Morris, as personal
representative of the estate of David Allan Woods, appeals the circuit court's
amended order granting the State Fiscal Accountability Authority (SFAA) and the
South Carolina Insurance Reserve Fund's (IRF's; collectively, Respondents')
motion to alter or amend and denying the declaratory relief Morris sought. Morris
argues the circuit court erred in (1) interpreting section 1-11-460 of the South
Carolina Code (Supp. 2022) to be discretionary, (2) finding the judgment at issue
was not a "qualifying judgment" under section 1-11-460, (3) finding that covenants
not to execute rendered this matter not justiciable, and (4) interpreting the
undisputedly ambiguous insurance policy in favor of the insurer rather than in
favor of coverage. We affirm.
This case arose out of a 42 U.S.C. §1983 action Morris filed in the United States
District Court for the District of South Carolina against Berkeley County
corrections officers Andrew J. Bland; Richard T. Burkholder; Leemon E. Carner;
Priscilla Bland, née Garrett; and Jerry Speissegger, Jr. (collectively, Defendants)
after Woods died while in custody at the Hill-Finklea Detention Center. A jury
returned a verdict against Defendants and awarded $500,000 in actual damages
against Defendants jointly and severally; $150,000 in punitive damages against
Andrew J. Bland; $1 million in punitive damages against Burkholder; $150,000 in
punitive damages against Carner; $150,000 in punitive damages against
Speissegger; and $1 million in punitive damages against Priscilla Bland.
Following a motion for setoff, the district court reduced the actual damages to
$171,875.
The IRF tendered $1,017,782.38 in partial satisfaction of the judgment; this
included $417,782.37 in attorney's fees, costs, and post-judgment interest. Morris
then filed this declaratory judgment action in South Carolina state court against
Defendants and Respondents to recover the outstanding punitive damage awards
from Berkeley County's General Tort Liability Insurance policy issued by the IRF
(the IRF Policy) 1 and under section 1-11-460.2
We hold the circuit court did not err in finding Morris's declaratory judgment
action against Respondents was moot. See Cheap-O's Truck Stop, Inc. v. Cloyd,
350 S.C. 596, 602, 567 S.E.2d 514, 517 (Ct. App. 2002) ("An appellate court will
not pass on moot and academic questions or make an adjudication where there
remains no actual controversy." (quoting Curtis v. State, 345 S.C. 557, 567, 549
S.E.2d 591, 596 (2001))); Sloan v. Friends of Hunley, Inc., 369 S.C. 20, 26, 630
S.E.2d 474, 477 (2006) ("A moot case exists where a judgment rendered by the
court will have no practical legal effect upon an existing controversy because an
intervening event renders any grant of effectual relief impossible for the reviewing
court."). "[A]n automobile liability insurance policy is basically a contract of
indemnity. The insurer is obligated to pay only those sums which the insured
becomes legally obligated to pay." Smalls v. Blackmon, 269 S.C. 614, 617, 239
S.E.2d 640, 641 (1977). Morris executed and filed Assignments of Rights and
Covenants Not to Execute (the Covenants) with each of the Defendants after filing
her declaratory judgment action and judgment had been entered in the district court
case. In consideration of the assignments under the Covenants, Morris covenanted
"not to execute against any assets of the [Defendants]" and "not to institute any
further claims, lawsuits, bankruptcy proceedings, or other causes of action against
the [Defendants] to enforce or collect the [district court] judgment." Because
Morris and Defendants executed the Covenants after judgment was entered in the
1
Under the IRF policy, Berkeley County had a policy limit of $600,000 per
"occurrence" resulting in personal injury. The policy also provided for
supplementary payments for expenses incurred by the IRF and costs taxed against
the insured in any suit defended by the IRF.
2
S.C. Code Ann. § 1-11-460 ("The [SFAA], through the Division of Insurance
Services, is authorized to pay judgments against individual governmental
employees and officials, in excess of one million dollars, subject to a maximum of
four million dollars in excess of one million dollars for one employee and a
maximum of twenty million dollars in excess of five million dollars in one fiscal
year. These payments are limited to judgments rendered under 42 U.S.C. Section
1983 against governmental employees or officials who are covered by a tort
liability policy issued by the [IRF]. These payments are also limited to judgments
against governmental employees and officials for acts committed within the scope
of employment. If a judgment is paid, the payment must be recovered by
assessments against all governmental entities purchasing tort liability insurance
from the [IRF].").
district court case, Morris could not release Defendants from a future judgment.
Instead, she could only covenant not to execute the existing judgment against them
and relieve them from liability. See Cobb v. Benjamin, 325 S.C. 573, 578, 482
S.E.2d 589, 591 (Ct. App. 1997) ("[A] covenant not to sue is a promise not to
enforce a right of action or to execute a judgment when one had such right at the
time of entering into the agreement."). Here, both the IRF policy and section
1-11-460 functioned to indemnify Defendants for the amount they were liable to
pay under the judgment. However, because Morris released them from all liability,
the IRF and the SFAA were likewise no longer liable to pay under the IRF policy
and section 1-11-460. See Smalls, 269 S.C. at 617, 239 S.E.2d at 641 ("An
'insurance carrier is in the same legal position as its insured. A liability insurance
carrier only contracts to pay any debt the insured is liable to pay.'" (quoting
Travelers Ins. Co. v. Allstate Ins. Co., 249 S.C. 592, 596, 155 S.E.2d 591, 595
(1967))). Morris relies on Fowler v. Hunter3 in support of her argument that the
Covenants did not extinguish Defendants' liability or render her case moot. Fowler
is factually distinguishable from the instant case because it involved a prejudgment
covenant not to execute that assigned an insured's pending claim for professional
liability against its insurance agency to the plaintiff. Id. at 359-60, 697 S.E.2d at
533-34. In Fowler, our supreme court held the prosecution of an assigned
professional negligence claim against the insurance agency could proceed when a
covenant not to execute was entered into. Id. Fowler is inapplicable because
Morris signed a post-judgment covenant not to execute and this case does not
involve the assigned claims.
As this court stated in Cobb, when an insured is relieved of a personal obligation to
pay any judgment, the insurance company is relieved of its liability to pay under
the policy. See 325 S.C. at 579, 482 S.E.2d at 592 ("When [the complainant]
removed the obligation to pay a judgment from [the insured], she also relieved [the
insurance company] of its liability to pay under [the insured]'s policy.").
Moreover, the Cobb court enforced the reservation of right to proceed against any
available underinsured motorist (UIM) coverage under the covenant not to execute.
See id. at 578, 482 S.E.2d at 591. This is an important factual distinction for this
case because in Cobb, the UIM coverage acted as first party coverage for the
complainant, not the insured. Based on the foregoing, we affirm the circuit court's
order on the ground of mootness.4
3
388 S.C. 355, 697 S.E.2d 531 (2010).
4
Our affirmance of the circuit court's order on this ground is dispositive of
Morris's remaining issues. See Futch v. McAllister Towing of Georgetown, Inc.,
As to Morris's contention that the Covenants were not presented to the circuit
court, we find this argument is not preserved for appellate review. See Wilder
Corp. v. Wilke, 330 S.C. 71, 76, 497 S.E.2d 731, 733 (1998) ("It is axiomatic that
an issue cannot be raised for the first time on appeal, but must have been raised to
and ruled upon by the trial judge to be preserved for appellate review.").
Respondents asked the circuit court to take judicial notice of the Covenants. The
amended order indicated the circuit court took judicial notice of the Covenants.
Morris did not argue to the circuit court that the Covenants were not properly
before it. Moreover, Morris detailed several provisions of the Covenants in her
memorandum in response to Respondents' cross-motion for summary judgment
and conceded at the summary judgment hearing that she executed the Covenants
with each Defendant. Accordingly, we find this argument is not preserved.
AFFIRMED.
KONDUROS and VINSON, JJ., and LOCKEMY, A.J., concur.
335 S.C. 598, 613, 518 S.E.2d 591, 598 (1999) (holding an appellate court need
not address remaining issues on appeal when its determination of a prior issue is
dispositive).