Cincinnati Insurance v. Allstate Insurance

THE STATE OF SOUTH CAROLINA

THE STATE OF SOUTH CAROLINA

In The Court of Appeals

Cincinnati Insurance Company,       
Respondent,

v.

Allstate Insurance Company and Louis Donaldson,       
Defendants,

of whom Louis Donaldson is       
Appellant.

Appeal From Bamberg County

Rodney A. Peeples, Circuit Court Judge

Unpublished Opinion No. 2003-UP-711 

Heard June 11, 2003 – Filed December 9, 2003

AFFIRMED

Robert L. Buchanan, Jr., of Aiken, for Appellant

Everett A. Kendall, II and Mark S. Barrow, both of Columbia,
for Respondent.

PER CURIAM:  Cincinnati Insurance Company
(Cincinnati) brought this declaratory judgment action against Louis Donaldson,
among others, to determine whether its policy provided underinsured motorist
(UIM) coverage to Donaldson and in what amount.  The parties stipulated to a
bench trial without oral argument, which resulted in a judgment for Cincinnati. 
Donaldson appeals, arguing (1) where an insurer fails to use a South Carolina
Offer of Optional Additional Uninsured and Underinsured Automobile Insurance
Coverages form as required under S.C. Code Ann. § 38-77-350(A) (Supp. 2002),
the offer is automatically invalid, (2) evidence of oral negotiations can not
be used to prove a meaningful offer pursuant to S.C. Code Ann. § 38-77-160 (Supp.
2002); and (3) Cincinnati did not make a meaningful offer of UIM coverage pursuant
to S.C. Code Ann. § 38-77-160 (Supp. 2002).  We affirm.

FACTS/PROCEDURAL
HISTORY

Louis Donaldson was injured in an automobile wreck
on December 10, 1997.  At the time, he was driving a van owned by Ryder Transportation
Services and leased to Major Printing, Inc., d/b/a Quality Printing (Quality). 
Donaldson was driving the van in the course and scope of his employment with
Quality.

The van was insured for Quality by Cincinnati Insurance
Company (Cincinnati).  The policy insured the van for liability in the amount
of $1,000,000.00. The policy also provided UIM coverage and uninsured motorist
coverage in the amount of $300,000. 

Cincinnati brought this action to determine
whether its policy provided UIM coverage to Donaldson and in what amount.  Cincinnati
stipulated that its policy provided $300,000.00 in UIM coverage. However, Donaldson
claimed the policy should be reformed to provide UIM coverage equal to the liability
coverage of $1,000,000.00 because there was no meaningful offer.

The parties filed cross-motions for summary judgment. 
Cincinnati included an affidavit from Paul Eaddy, the insurance agent who negotiated
the contract for Cincinnati.  In the affidavit, Eaddy stated:

-
I explained the “Offer of Underinsured Motorist
Coverage” section of the insurance policy to Dorothy Roe in a thorough and detailed
manner.

-
In those discussions, I offered a number of options
of additional [UIM] coverage at different increased premiums up to the limits
of the liability coverage carried by [Quality] under its automobile insurance
policy.

-
Based upon (1) my thorough and detailed explanation
of the “Offer of Underinsured Motorist Coverage” section of the insurance policy,
including the fact that any number of additional limits of underinsured coverage
could be selected up to the limits of the liability coverage carried by [Quality]
under its automobile insurance policy; and (2) my offer of additional limits
of [UIM] coverage for increased premiums up to the limits of the liability coverage
carried by [Quality] under its automobile insurance policy, Dorothy Roe selected
$300,000.00 as the additional [UIM] coverage that [Quality] would purchase.

Additionally, Cincinnati submitted the affidavit
of Dorothy Roe, an employee of Quality who negotiated the policy with Eaddy. 
In her affidavit, Roe stated, in pertinent part:

-
Paul Eaddy, the insurance agent for [Quality], and
I discussed the “Offer of Underinsured Motorist Coverage” section of the policy
in a thorough and detailed manner.

-
In those discussions, Paul Eaddy offered a number
of options of additional [UIM] coverage at different increased premiums up to
the limits of the liability coverage carried by [Quality] under its automobile
insurance policy.

-
Based upon my discussions with Paul Eaddy
regarding
the increased premiums that corresponded with additional limits of [UIM] coverage
and my knowledge that I could select any number of additional limits of [UIM]
coverage up to the limits of the liability coverage carried by [Quality] under
its automobile insurance [policy], I selected $300,000.00 as the additional
underinsured motorist coverage that [Quality] would purchase.

The South Carolina Offer of Optional Additional
Uninsured and Underinsured Automobile Insurance Coverages form required by §
38-77-350(A)  (Supp. 2002) and provided by Cincinnati was also submitted.  The
form omitted the range of additional premiums that would be charged for the
UIM limits specified.  Otherwise, the form was complete.

At the stipulation of both parties, the
trial court conducted a bench trial reviewing their submitted evidence but without
oral argument.  The trial court determined the Cincinnati failed to complete
the required form because it had not included the range of premiums available,
but that its failure was not fatal to the issue of whether Cincinnati made a
meaningful offer.  Based on the affidavits of Eaddy and Roe, the judge found
that Cincinnati provided the required information orally, and therefore, made
a meaningful offer of UIM coverage. This appeal follows.

STANDARD OF REVIEW

Whether an insured’s offer of optional UIM coverage is sufficiently
meaningful to satisfy the requirements of S.C. Code Ann. § 38-77-160 (Supp.
2002) is a question of law for the court.  See Antley v. Nobel Ins.
Co., 350 S.C. 621, 632, 567 S.E.2d 872, 878 (Ct. App. 2002).  In an action
at law, on appeal of a case tried without a jury, the findings of fact of the
judge will not be disturbed upon appeal unless found to be without evidence
which reasonably supports the judge’s findings.  Townes Associates, Ltd.
v. City of Greenville, 266 S.C. 81, 221 S.E.2d 773, 775 (1976).  In other
words, the judge’s findings are equivalent to a jury’s findings in a law action. 
Id.  This rule applies whether the judge’s findings are made with or
without a reference to a master-in-equity or special referee.  Id.

LAW/ANALYSIS

Donaldson initially argues that
the vehicle involved in the accident was not covered at all because it was leased
not owned by Quality Printing, since the policy excluded non-owned vehicles.
However, Cincinnati has stipulated that its policy provided at least $300,000
in UIM coverage on the vehicle. And the vehicle in question was explicitly listed
on the automobile schedule Quality Printing’s business auto policy with Cincinnati.
Therefore, the general language excluding the vehicle is ineffective.

Donaldson also argues that Cincinnati failed to make
a meaningful offer of UIM insurance because the offer was not in writing.  We
disagree. South Carolina law requires automobile insurance carriers offer “at
the option of the insured, [UIM] coverage up to the limits of the insured liability
coverage ….”  S.C. Code Ann. § 38-77-160 (Supp. 2000). Such an offer must be
meaningful. State Farm Mut. Auto. Ins. Co. v. Wannamaker, 291 S.C. 518,
522, 354 S.E.2d 555, 557 (1987). A meaningful offer of UIM insurance exists
where (1) the insurer’s notification process is commercially reasonable, whether
oral or in writing;  (2) the insurer specifies the limits of optional coverage
and not merely offer additional coverage in general terms; (3) the insurer intelligibly
advises the insured of the nature of the optional coverage; and (4) the insurer
tells the insured that the optional coverage is available for an additional
premium.  Id. at 521, 354 S.E.2d at 556. An oral offer, therefore, can
be meaningful. In the present matter, affidavits of Eaddy and Roe support the
trial court’s finding that the parties knew of the available limits and premiums,
knew other options were available, and elected the $300,000 limit.  This evidence
reasonably supports the trial court’s finding that Cincinnati made an offer
for optional UIM coverage, part written and part orally, that was sufficiently
meaningful to satisfy the requirements of S.C. Code Ann. § 38-77-160 (Supp.
2002).

S.C. Code Ann. § 38-77-350(A)  (Supp. 2002) does
require that all insurers use a form “in offering optional coverages required
to be offered pursuant to law to applicants for automobile insurance policies.”
The form must be used to make an offer of optional insurance to all new applicants. 
Id.  Among other things, it must provide a list of available limits and
the range of premiums for the limits.  S.C. Code Ann. § 38-77-350(A)(2)  (Supp.
2002).  The statute further provides:

… [i]f this form is properly completed and executed by the
named insured it is conclusively presumed that there was an informed, knowing
selection of coverage and neither the insurance company nor any insurance agent
has any liability to the named insured or any other insured under the policy
for the insured’s failure to purchase any optional coverage or higher limits.

S.C. Code Ann. § 38-77-350(B)  (Supp. 2002).  An
insurer who uses a properly executed and approved offer form that minimally
complies with S.C. Code Ann. § 38-77-350 (2002) enjoys a conclusive presumption
“that there was an informed, knowing selection of coverage.”  Antley v. Nobel
Ins. Co., 350 S.C. 621, 632, 567 S.E.2d 872, 878 (Ct. App. 2002).

Here, Cincinnati’s form clearly failed to include
the range or premiums available, as required by subsection (A)(2).  Thus, the
form did not comply with the statute, and Cincinnati does not enjoy the statutory
presumption that it made a meaningful offer.  However, the failure to comply
with the form requirement does not preclude a meaningful offer. As discussed
earlier, the evidence in the record is sufficient to support the trial court’s
finding that Cincinnati made a meaningful offer.

CONCLUSION

For the forgoing reasons, the decision of the circuit
court is

AFFIRMED.

HOWARD and BEATTY, JJ., and JEFFERSON, A.J., concur.