Farm Bureau v. Hawkins

THIS OPINION HAS NO PRECEDENTIAL VALUE.  IT SHOULD NOT

BE CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING

EXCEPT AS PROVIDED BY RULE 239(d)(2),
SCACR.

THE STATE OF SOUTH CAROLINA

In The Court of Appeals

South Carolina Farm Bureau Mutual Insurance Company,       
Respondent,

v.

Arnold Hawkins, Freedonia Hawkins and Lakeya Hawkins,       
Appellants.

Appeal From Berkeley County

Thomas L. Hughston, Jr., Circuit Court
Judge

Unpublished Opinion No. 2005-UP-116

Submitted January 1, 2005 – Filed February
16, 2005   

AFFIRMED

George J. Kefalos, of Charleston, for Appellants.

Robert J. Thomas and William E. Hopkins, Jr., both of Columbia,
for Respondent.

PER CURIAM:  In this insurance coverage
dispute, Appellants (the Hawkinses) appeal the circuit court’s denial of their
motion for judgment notwithstanding the verdict (JNOV) or alternatively for
a new trial.  We affirm.

FACTS

Respondent South Carolina Farm Bureau Mutual Insurance
Company (Farm Bureau) issued a homeowner’s insurance policy concerning property
located at 3826 Highway 17A North, Jamestown, South Carolina.  The policy was
issued based on the application signed by Arnold Hawkins.  In the application,
Arnold Hawkins represented he owned the property to be covered by the policy.

In January 2000, the property sustained substantial
fire damage.  After investigation by both the South Carolina Law Enforcement
Division and Farm Bureau, it was determined the fire was intentionally set. 
The investigation also revealed Arnold Hawkins did not own the property when
he signed the insurance application.  At the time Arnold Hawkins made the representation
of ownership on the application, title to the property was in the name of Arnold’s
daughter, Lakeya Hawkins.

Farm Bureau initiated a declaratory judgment action
seeking a judgment that coverage was not available because the fire was intentionally
set by, or at the direction of, Arnold Hawkins or, alternatively, Farm Bureau
was relieved of its obligations under the policy due to the material misrepresentations
of Arnold Hawkins as to the ownership of the property.  Pursuant to special
interrogatories, the jury found for Farm Bureau only on the material misrepresentation
claim.  The Hawkinses filed a motion for JNOV or a new trial pursuant to Rule
50, SCRCP.  The circuit court denied the motion, and this appeal followed.

LAW/ANALYSIS

The Hawkinses allege the circuit court erred in denying
the motion for JNOV or, in the alternative, a new trial.  We disagree.

At the close of the evidence, the Hawkinses moved
for a directed verdict on one ground as to the misrepresentation claim. [1]   The sole argument was based on the failure
of Farm Bureau prior to trial to tender the premiums to the named insured, Arnold
Hawkins.  We initially observe that this defense—failure to tender premiums—constitutes
an affirmative defense or matter of “avoidance” under Rule 8(c), SCRCP.  See
Oyler v. Oyler, 293 S.C. 4, 7, 358 S.E.2d 170, 172 (Ct. App. 1987) (“[A]n
avoidance is a defense which goes beyond the basic elements of the opposing
party’s cause and depends upon additional facts to defeat the claim”); see
generally Floyd v. St. Paul Fire & Marine Ins. Co., 285 S.C.
148, 150, 328 S.E.2d 132, 132 (Ct. App. 1985); Brown v. Dr. Michael D. Hoffman 
& Assoc., 111 S.W.3d 826, 827 (Texas 2003); McCord v. Horace Mann
Ins. Co., 390 F.3d 138, 141 (Mass. 2004) (referring to failure of condition
precedent as an affirmative defense).

The Hawkinses pled no such defense, and the general
rule precludes consideration of claims or defenses not presented in the pleadings. 
See Fraternal Order of Police v. South Carolina Dep’t of Revenue,
352 S.C. 420, 435, 574 S.E.2d 717, 725 (2002) (“Generally, claims or defenses
not presented in the pleadings will not be considered on appeal”); Howard
v. South Carolina Dep’t of Highways, 343 S.C. 149, 155, 538 S.E.2d 291,
294 (Ct. App. 2000) (“Affirmative defenses are waived if not pled”); Oyler
v. Oyler, 293 S.C. at 6, 358 S.E.2d at 171-72 (stating that under Rule 8(c),
SCRCP, a party must set forth in its pleadings any matter “constituting an avoidance
or affirmative defense”); R. Brown & Sons, Inc. v. Credit Alliance Corp.,
473 A.2d 1168, 1170 (Vt. 1984) (“[A] matter raised constituting an avoidance
is an affirmative defense and must be affirmatively pled”). While a matter not
included in the pleadings may be tried by the express or implied consent of
the parties under Rule 15(b), SCRCP, the scant record before us does not allow
us to affirmatively find such consent.  The burden is on the appellant to present
a sufficient record for review.  State v. Mitchell, 330 S.C. 189, 194,
498 S.E.2d 642, 645 (1998); State v. Smith, 359 S.C. 481, 490, 597 S.E.2d
888, 893 (Ct. App. 2004). [2]  

We do not believe the Hawkinses’ argument would
prevail in any vent.  We begin this analysis with the acknowledgement that generally
“an insurance company suing to cancel a policy for fraud[] must restore or tender
the premiums received as a condition of relief.”  Arnold v. Life Ins. Co.
of Georgia, 226 S.C. 60, 73, 83 S.E.2d 553, 559 (1954).   The supreme court
revisited this issue in the case of McElmurray v. American Fidelity Fire
Insur. Co., 236 S.C. 195, 113 S.E.2d 528 (1960).  In  McElmurray,
the court focused on the policy language and determined that “[t]he policy contract
expressly negates necessity for return to the insured of the unearned premium
in order to effect cancellation of the policy by the insurer.”  Id. at
205, 113 S.E.2d at 533.   We are persuaded the policy language here compels
the same conclusion.  Under the terms of the policy, the parties agreed that
“[i]f the premium is not refunded with the cancellation or when the policy is
returned to us, we will refund it within a reasonable time after the
date cancellation takes effect.”  (emphasis in original)  Farm Bureau, therefore,
was not required to refund the premiums to Arnold Hawkins as a condition precedent
to maintaining the underlying declaratory judgment action.  Moreover, Farm Bureau’s
efforts to cancel the policy did not “take effect” until it prevailed on its
misrepresentation claim.  In this regard, during the hearing on post-trial motions,
Farm Bureau advised that “a check [will be] available for the Hawkins’ [sic]
as soon as the judgment is entered.”  The Hawkinses, through counsel, promptly
refused the tender.  And finally, it is beyond dispute that an earlier tender
of the premiums to Arnold Hawkins would have likewise been a futile act, and
any contention to the contrary finds no traction in the abbreviated record before
us.

Having addressed the sole ground asserted by the
Hawkinses in their directed verdict motion, we decline to address—as unpreserved—the
remaining issues argued in their brief.  A directed verdict motion stating the
specific grounds is a prerequisite for a subsequent motion for judgment notwithstanding
the verdict.  See In re McCracken, 346 S.C. 87, 93, 551 S.E.2d
235, 238 (2001) (stating only grounds raised in directed verdict motion may
properly be reasserted in JNOV motion). 

CONCLUSION

For these reasons, we find that the trial court
acted within its discretion in denying the motion for a new trial and properly
denied the JNOV motion.

AFFIRMED.

HUFF, KITTREDGE, and BEATTY, JJ., concur.

[1]        It does appear the Hawkinses may have made an initial motion
for a directed verdict at the close of Farm Bureau’s case in chief, but that
portion of the trial transcript was not included in the record on appeal.

[2]        Farm Bureau advanced this argument in its final brief.  The
Hawkinses submitted a final reply brief, but chose not to respond to their
failure to include this defense in their Answer and Counterclaim.