UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 11-1009
CALVIN BEN COLLINS,
Plaintiff - Appellant,
v.
AUTO-OWNERS INSURANCE COMPANY,
Defendant - Appellee.
Appeal from the United States District Court for the District of
South Carolina, at Florence. Terry L. Wooten, District Judge.
(4:09-cv-00696-TLW)
Submitted: June 30, 2011 Decided: July 14, 2011
Before KING, DUNCAN, and WYNN, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Stephen J. Wukela, WUKELA LAW FIRM, Florence, South Carolina,
for Appellant. Charles R. Norris, NELSON MULLINS RILEY &
SCARBOROUGH LLP, Charleston, South Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Calvin Ben Collins appeals the district court’s order
granting summary judgment in favor of Auto-Owners Insurance
Company (“Auto-Owners”) and dismissing Collins’s claims for
breach of contract and bad faith refusal to pay an insurance
claim. On appeal, Collins has abandoned his breach of contract
claim and argues solely that the court erred in granting summary
judgment on his bad faith claim. Finding no error, we affirm.
In 2002, Collins was involved in a vehicular accident
with Mark Frasier, who did not have insurance. Frasier lost
consciousness while driving, veered into oncoming traffic,
collided with several vehicles, and caused injury to Collins and
others. Collins was insured by Auto-Owners under three
uninsured motorist policies of $500,000 each. Following the
accident, Collins made claims totaling $1.5 million, but
Auto-Owners declined to pay these claims. Collins ultimately
brought suit against Frasier in South Carolina court; the
litigation was captioned Collins v. Frasier. Auto-Owners, as
the carrier of Collins’s uninsured motorist liability coverage,
defended the suit.
Prior to trial in Collins v. Frasier, Collins’s
attorney and attorneys for Frasier and Auto-Owners engaged in
extensive settlement negotiations. Collins demanded several
different amounts during the course of the negotiations, but
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never less than $1 million. Auto-Owners offered $100,000,
although there is evidence in the record that at least one Auto-
Owners claims adjuster valued the claim at $150,000. Auto-
Owners believed that Frasier had legitimate defenses to both
liability and damages, and thus did not offer a greater
settlement amount. Collins insisted that Auto-Owners’ fair
evaluation of his claims was considerably higher than $100,000
and accused his insurer of bad faith. Auto-Owners believed that
Collins’s demands were excessive, and thus would not offer a
higher amount.
The jury ultimately returned a verdict for Frasier,
finding that he had suffered a sudden, unforeseeable incapacity
to operate his vehicle and was thus not liable to Collins. See
Collins v. Frasier, 662 S.E.2d 464, 465 (S.C. Ct. App. 2008).
This verdict was affirmed on appeal. See id. In 2006, during
the pendency of Collins v. Frasier, Collins sued Auto-Owners in
state court for breach of contract and bad faith failure to
settle an insurance claim. Auto-Owners removed the case to the
district court pursuant to the court’s diversity jurisdiction.
In the district court, Collins argued that Auto-Owners
breached the insurance agreement and acted in bad faith. The
district court granted summary judgment in favor of Auto-Owners,
dismissed the claims, and this timely appeal followed.
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We review de novo a district court’s order granting
summary judgment, viewing the facts and inferences in the light
most favorable to the nonmoving party. Rowzie v. Allstate Ins.
Co., 556 F.3d 165, 167 (4th Cir. 2009). Summary judgment is
appropriate when no genuine issue of material fact exists and
the moving party “is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a). Summary judgment will be granted unless
“a reasonable jury could return a verdict for the nonmoving
party” on the evidence presented. Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986).
Under South Carolina law (which governs the
substantive questions at issue in this diversity suit), an
insurer that unreasonably refuses to settle a claim with an
insured within policy limits is subject to liability in tort.
Tyger River Pine Co. v. Md. Cas. Co., 170 S.E. 346 (S.C. 1933).
“[I]f an insured can demonstrate bad faith or unreasonable
action by the insurer in processing a claim under their mutually
binding insurance contract, he can recover consequential damages
in a tort action.” Nichols v. State Farm Mut. Auto. Ins. Co.,
306 S.E.2d 616, 619 (S.C. 1983). Because, under South Carolina
law, a bad faith action exists separately from an action in
contract, a bad faith claim may exist even in the absence of any
violation of an insurance contract provision. See Tadlock
Painting Co. v. Md. Cas. Co., 473 S.E.2d 52, 55 (S.C. 1996).
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The elements of a bad faith refusal to pay a claim
action are
(1) the existence of a mutually binding contract of
insurance between the plaintiff and the defendant;
(2) refusal by the insurer to pay benefits due under
the contract; (3) resulting from the insurer’s bad
faith or unreasonable action in breach of an implied
covenant of good faith and fair dealing arising on the
contract; (4) causing damages to the insured.
Howard v. State Farm Mut. Auto. Ins. Co., 450 S.E.2d 582, 586
(S.C. 1994).
We have reviewed the record, including the parties’
correspondence and Auto-Owners’ internal memoranda, and we
cannot conclude, on these facts, that Auto-Owners acted in bad
faith. It is clear that even before the jury’s verdict in
Collins v. Frasier, Auto-Owners had legitimate reservations
about the validity of Collins’s claims. In contemporaneous
memoranda and letters to Collins’s attorney, Auto-Owners’
attorneys and claims adjusters expressed their belief that
Frasier had meritorious defenses to both liability and the
extent of Collins’s damages. While Collins (and his attorney)
clearly believed that Collins was entitled to more than the
$100,000 offered by Auto-Owners, the fact that the parties had
different estimations of the value of a claim is not, under
South Carolina law, evidence of bad faith on the part of the
party offering the lower amount.
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Collins argues, though, that because internal Auto-
Owners documents suggest that at least one claims adjuster
initially valued his claim at $150,000, Auto-Owners’ $100,000
offer represented less than its own estimate of what the claim
was worth, and was thus made in bad faith. We do not agree.
“If there is reasonable ground for contesting a claim, there is
no bad faith” even where the insurer makes no offer to settle.
Snyder v. State Farm Mut. Auto. Ins. Co., 586 F. Supp. 2d 453,
458 (D.S.C. 2008) (citing Crossley v. State Farm Mut. Auto. Ins.
Co., 415 S.E.2d 393, 397 (S.C. 1992)). Thus, because Auto-
Owners had a reasonable ground for contesting the claim, and was
not even obligated to make the initial $100,000 settlement
offer, we cannot say it exercised bad faith in failing to make a
higher offer.
We accordingly affirm the judgment of the district
court. We dispense with oral argument because the facts and
legal contentions are adequately presented in the materials
before the court, and argument would not aid the decisional
process.
AFFIRMED
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