Federal Insurance Company v. Evian Horizontal Property Regime

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 04-1883
FEDERAL INSURANCE COMPANY,
Plaintiff - Appellee,
versus
EVIAN HORIZONTAL PROPERTY REGIME; EVIAN
CONDOMINIUM ASSOCIATION, INCORPORATED,
Defendants & Third Party Plaintiffs - Appellants,
versus
DONALD JAY PIER,
Defendant,
versus
COASTAL PLAINS INSURANCE, INCORPORATED;
COASTAL PLAINS INSURANCE OF THE LOW COUNTRY,
INCORPORATED,
Third Party Defendants.
Appeal from the United States District Court for the District of
South Carolina, at Beaufort. Sol Blatt, Jr., Senior District
Judge. (CA-03-1977)
Argued: February 3, 2005 Decided: March 11, 2005
Before LUTTIG and MOTZ, Circuit Judges, and Samuel G. WILSON,
United States District Judge for the Western District of Virginia,
sitting by designation.
Affirmed by unpublished per curiam opinion.

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ARGUED: James Day Donohoe, LAW OFFICES OF EDWARD E. BULLARD, Hilton
Head Island, South Carolina, for Appellants. David M. Leonard,
LORD, BISSELL & BROOK, Atlanta, Georgia, for Appellee. ON BRIEF:
William Howell Morrison, MOORE & VAN ALLEN, P.L.L.C., Charleston,
South Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).

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PER CURIAM:
In this diversity action seeking declaratory judgment of an
insurance dispute, Evian Horizontal Property Regime and Evian
Condominium Association (hereinafter, “Evian”) appeal the district
court’s grant of summary judgment to Federal Insurance Company. We
affirm.
I.
Evian is a condominium association and horizontal property
regime located in Hilton Head, South Carolina.
In February 2001, Donald Pier, the owner of an apartment in
Evian and a member of the condominium associates, filed an action
in South Carolina state court against Evian for damages arising
from injuries he sustained in a fall on a walkway leading to his
apartment. The complaint alleged that Evian had left the
irrigation system operating on a freezing night, and that Pier
injured himself when he slipped and fell on a patch of ice while
walking his dog.
Evian submitted a claim to Northfield Insurance Company, with
whom Evian had a general liability insurance policy, requesting
defense and indemnification in the Pier litigation. Northfield
denied the claim, and brought a declaratory judgment action against
Evian in the United States District Court for the District of South
Carolina seeking a determination that Northfield was not obligated

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to provide coverage in the Pier action. In August 2002, the
district court entered judgment in favor of Northfield, holding
that the policy’s exclusion for bodily injury claims against the
insured by a member of the association applied to bar coverage.
See Northfield Ins. Co. v. Evian HPR, Civil Action No. 9:01-883-23
(D.S.C. Aug. 27, 2002). The court noted that Evian, which was
“responsible for procuring insurance for regime property against
risks failed, presumably by mistake, to properly do so.”
In April or May 2002, while the action between Northfield and
Evian was pending, Evian reported the Pier action to Federal, with
whom Evian had an insurance policy that covered errors & omissions
of its officers and directors. This policy states that Federal
shall indemnify Evian for “all Loss which [Evian] shall become
legally obligated to pay on account of any claim made against
[Evian] during or after the Policy Period for a Wrongful Act”
committed by Evian and reported to Federal during the policy
period. The policy also provides that Federal has a duty to defend
in suits potentially within the ambit of the policy.
The Federal policy has an exclusion for “payment of loss in
connection with any claims made against” Evian “based upon, arising
from or in consequence of any . . . bodily injury, sickness,
disease or death of any person.” Relying on this exclusion,
Federal denied coverage to Evian and, in June 2003, brought the
instant declaratory judgment seeking a determination that Federal

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was not obligated to defend or indemnify Evian in the Pier action.
Evian counterclaimed, asking the court to declare that Federal “has
a duty to defend and indemnify Evian Horizontal Property Regime and
the Association under the policy against the claims of Donald Jay
Pier asserted against them in the Pier lawsuit”. On cross-motions
for summary judgment, the district court held that Federal had no
duty to defend, reasoning that the bodily injury exclusion in the
Federal policy barred the requested coverage.
II.
We review this issue of contract interpretation de novo,
applying South Carolina law. We construe insurance policies using
the general rules of contract construction, understanding that in
South Carolina, clauses of exclusion are narrowly construed.
Buddin v. Nationwide Mut. Ins. Co., 157 S.E.2d 633, 655 (1967).
An insurance company’s duty to defend is distinct from, yet
interrelated with, its obligation to indemnify the insured. “The
agreement to defend contemplates the rendering of services” while
indemnification “contemplates merely the payment of money.” Sloan
Const. Co. v. Central Natl. Ins. Co. of Omaha, 236 S.E.2d 818, 820
(S.C. 1977)(internal quotation marks omitted). Determination of
whether an insurer is obligated to defend or to indemnify requires
a court to look to the allegations in the underlying complaint
filed “against an insured.” South Carolina Med. Malpractice Liab.

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Ins. Joint Underwriting Assoc. v. Ferry, 354 S.E.2d 378, 380 (S.C.
1987). If the allegations of that complaint “fail to bring a claim
within policy coverage, an insured has no duty to defend” (and,
therefore, no obligation to indemnify). Id. An insurer has no
duty to defend “where the damage is caused by a reason
unambiguously excluded under the policy.” Federated Mut. Ins. Co.
v. Piedmont Peteroleum Corp., 444 S.E.2d 532, 533 (S.C. Ct. App.
1994).
Evian’s counterclaim asked the court to declare that Federal
had “a duty to defend and indemnify Evian Horizontal Property
Regime and the Association against the claims of Donald J. Pier
asserted against them in the Pier lawsuit.” Because Evian
unambiguously asked Federal for a defense “against the claims . .
. asserted . . . in the Pier lawsuit”, we must look to the
complaint filed in the Pier lawsuit to determine the scope of
Federal’s duty to defend (or indemnify). The Pier complaint
alleges only that Evian caused Pier bodily injury by “negligent,
willful, wanton, careless, and grossly negligent” acts.
The plain language of the Federal policy makes clear that
Federal does not have a duty to defend or indemnify Evian for any
of the claims asserted against Evian in the Pier lawsuit. The
policy does generally cover loss due to claims made against Evian
for wrongful acts that result in a legal obligation to pay.
However, the policy specifically excludes losses in connection with

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claims “based upon, arising from, or in consequence of a bodily
injury.” All of the claims alleged in the Pier complaint
unmistakably arise from bodily injury to Pier, assertedly caused by
Evian, and are therefore excluded.
III.
For the foregoing reasons, the judgment of the district court
is
AFFIRMED.

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