Interesting and Useful Cases in Torts and Insurance


Nexsen Pruet attorney Marc Manos, a member of the SC Bar Torts and Insurance Practice Section Council, sheds light on a few recent cases from the Fourth Circuit Court of Appeals, focused in the area of Torts & Insurance. 

Below are summaries of the cases selected for February and early March 2018.

Elliott v. American States Ins. Co.

No. 17-1421 (4th Cir. Feb. 20, 2018) (Published) INSURANCE: Plaintiff suffered serious injuries in an automobile accident. She settled with the at-fault drivers’ carrier for policy limits of $30,000 and then pursued her underinsured coverage of $100,000 less any payment received from the at-fault driver. The insurer refused settlement and the case was arbitrated and then confirmed in state court resulting in a $68,010.17 payment. Plaintiff brought an insurance unfair trade practice claim against the insurer for refusing to settle and forcing her to arbitrate. The Fourth Circuit affirmed that: (1) removal was timely; (2) diversity existed; and (3) the Complaint failed to state a claim under Rule 12(b)(6). The time for removal began to run when the defendant insurer actually received the summons and complaint, not the statutory agent for service. The “direct action” exception to diversity jurisdiction does not apply when an insured sues her own insurer for breach of the insurance contract or tortious conduct. As the liability of the at-fault driver must be determined to trigger payment, the insurer as a matter of law could not be liable for a refusal to offer more than token settlement amounts before the arbitration.

View case here

Singer v. Reali 

No. 15-2579 (4th Cir. Feb. 22, 2018) (Published) CLASS ACTION/SECURITIES FRAUD: Class representatives sued defendants (corporation and officers) for fraud on the market by concealing a fraudulent reimbursement scheme for medical procedures. When the scheme became public, share price dropped dramatically. District Court found loss causation, but dismissed for failure to sufficiently plead material misrepresentation and scienter. The Fourth Circuit reversed and remanded. The Complaint listed numerous precise public statements and stated how they were either false or deceptive due to omitted information. The complaint also alleged the necessary state of mind. The facts alleged showed that he defendants knew about the reimbursement rules and law and actively attempted to avoid them. Defendants’ cross-appeal on loss causation denied as the partial corrective statement issued in an 8-K by the company combined with an analyst release near the same time, showed the impact on the market. Remanded for further proceedings.

 View case here.

Due Forni, LLC v. Euro Restaurant Solutions, Inc.

No. 17-1096 (4th Cir. Feb. 23, 2018) (Unpublished) FRAUD/BREACH OF CONTRACT:  Plaintiff filed complaint with claims for fraud in the inducement, fraud, conversion and breach of contract arising out of sale of specialized pizza ovens. District court dismissed breach of contract claim as not meeting $75,000 jurisdictional level for diversity but retained other claims. The Fourth Circuit reversed. If any one of Plaintiff’s claims meets the minimum amount in controversy, then all properly pled related claims also remain in federal court, even if one or more of those claims could not meet the amount in controversy.

View case here

Carlton & Harris Chiropractic, Inc. v. PDR Network, LLC

No. 16-2185 (4th Cir. Feb. 23, 2018) (Published) TELEPHONE CONSUMER PROTECTION ACT (TCPA): District court dismissed TCPA claim because fax offered to give electronic Physician’s Desk Reference for free and, therefore, an unsolicited advertisement as a matter of law. The Fourth Circuit reversed because an FCC regulation found that “facsimile messages that promote goods or services even at no cost are unsolicited advertisements under the TCPA’s definition.” 71 Fed. Reg. 25,967 and 25,973 (May 3, 2006). Because the Hobbs Act applies to FCC regulations promulgated under the TCPA, the District Court had no power to review the regulation and must apply it as written.

 View case here.

Lee v. Town of Fort Mill

No. 17-1064 (4th Cir. March 1, 2018) (Unpublished) CIVIL RIGHTS: Police officers responded a non-emergency call regarding a neighbor harassing plaintiff’s girlfriend. Upon arriving, officers found girlfriend and two pit bull mix dogs in yard. Dogs charged officer who had exited car and closed door. He had no route of escape and feared for his life. Fired three shots, first dog stopped. Second dog kept charging and third shot hit him in face. Plaintiff then tried to drive off with injured dog to animal hospital and committed illegal U-turn. Officers stopped and arrested for reckless driving. By the time animal control and Plaintiff’s mother got injured dog to animal emergency hospital, dog’s blood loss led to him being euthanized. Plaintiff sued for illegal seizure of dog, false arrest, and state law claims of intentional infliction of emotional distress. Summary judgement on federal claims affirmed. A reasonable officer could conclude that deadly force was only option to protect himself with two dogs charging full speed from only 20 feet away. Illegal U-turn over double yellow line in front of an oncoming car created sufficient probable cause for a reckless driving arrest. Remaining claim remanded to state court.

 View case here.

Jones v. City of Martinsburg

No. 17-1003 (4th March 5, 2018) (Unpublished) CIVIL RIGHTS: Police stopped plaintiff’s decedent who admitted having “something” when asked if he had a weapon. The decedent refused instructions to put his hands on the police car and ran after being tased twice. Back up arrived and two officers who grabbed the deceased arms fell to the ground with him. One got scratched and realized the decedent had a knife. The seven police officers backed away from the decedent, formed a circle and pulled their firearms. They demanded the decedent drop the knife. He continued to lay on the pavement motionless, with his right hand underneath him and the knife in his right hand. One officer fired his pistol, and they ended up firing 22 rounds into the decedent as he lay on the pavement, killing him. The videotape showed the decedent never moved toward the officers or moved from his prone position with the knife under him. The District Court granted summary judgment based, in part, on requests for admission deemed admitted by the magistrate judge. The Fourth Circuit agreed the admissions were properly deemed admitted, but reversed summary judgment finding that a reasonable jury could find the officers used excessive force.

View case here

Slay’s Restoration, LLC v. Wright Nat’l Flood Ins. Co.

No, 17-1106 (4th March 9, 2018) (Published) RICO: Owner of 18 apartment projects damaged by flooding hired contractor who hired subcontractor, Slay’s Restoration, to do drying work. Claims adjusting firm hired consultants and advised insurer work failed to meet industry standards and only to pay ¼ of claimed amounts. Subcontractor sued insurer, adjusting firm and consultants for violation and conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act (“RICO”) by using mails and wires to send false statements about subcontractor’s work. District court granted summary judgment on causation and national flood insurance act grounds. Fourth Circuit only reached RICO causation element and affirmed. Supreme Court set very high standard for RICO proximate causation — foreseeable or even intended consequences are not enough. Injury to property or business under 18 U.S.C. § 1964(c) must be a direct result, at the first step of causation, from the RICO conduct alleged. The direct injury flowed to the owner of the apartments, not the contractor or the subcontractor.

View case here.

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