Collins Holding Corp. v. Wausau Underwriters Insurance

Justice PLEICONES.

I respectfully dissent. As the majority holds, when considering whether an insurance company has the duty to defend, the court must look beyond the adjectives and labels used in *580the complaint to describe the acts to the acts themselves. Prior v. S.C. Med. Malpractice Liab. Ins. Joint Underwriting Ass’n, 305 S.C. 247, 407 S.E.2d 655 (Ct.App.1991). Here, the circuit court judge looked beyond the labels and determined that the negligent misrepresentation claim gave rise to a duty to defend because he found the “fraudulent unlawful promotion” which suggested players could win more than the daily maximum allowable by law and offered special inducements to gamblers, might also be characterized as “unintentionally unlawful.” I find the trial judge correctly held that the Plaintiffs alleged a negligent misrepresentation claim based on intentional acts that may have inadvertently violated the law. Unlike the “inherently injurious” conduct in Mfrs. and Merchants Mut. Ins. Co. v. Haney, 330 S.C. 152, 498 S.E.2d 222 (Ct.App.1998), the allegations that Collins advertised, offered food and beverages, and extended credit to Plaintiffs to promote participation in a then legal activity do not allege conduct that is in all particulars illegal.

The facts alleged in the third amended complaint2 support the circuit court’s conclusion that the complaint alleges an occurrence within the meaning of this CGL policy. E.g., Isle of Palms Pest Control v. Monticello Ins. Co., 319 S.C. 12, 459 S.E.2d 318 (Ct.App.1994). Moreover, I would hold that the trial court correctly held appellant waived any right to rely on the alleged untimeliness of respondent’s notice when it failed to plead it. While an issue not raised by the pleadings may be tried by consent at a summary judgment hearing, Staubes v. City of Folly Beach, 339 S.C. 406, 529 S.E.2d 543 (2000), such was not the case here.

I recognize that based solely on the assertions in the Plaintiffs’ third amended complaint, it is unlikely that Collins, as ownerAessor of the machines, could ultimately be liable for negligent misrepresentation. However, when determining whether an insurer has a duty to defend, the obligation is determined by the allegations in the complaint. Haney, 330 S.C. at 162, 498 S.E.2d at 222. Accordingly, I would affirm the trial court’s order granting Collins summary judgment.

. Although the Plaintiffs incorporate their previously stated facts and allegations into their negligent misrepresentation cause of action, they also include six paragraphs of additional facts and allegations that specifically pertain to negligent misrepresentation.