Updates on Insurance Coverage, Construction Defect
and Commercial Auto Law Developments
in North Carolina and South Carolina
Greetings from Evans & Co. Counselors and Litigators, with our November edition of our Case Notes series. 
We write with our regular updates on insurance, construction defect, and commercial auto law in the states of North Carolina and South Carolina, which we last visited about four months ago. We attach 26 pages presenting and analyzing the cases we mention below.
Please recall that our past Case Notes are archived at and we would be pleased to bring current the decisions on which we've reported previously, at your request.
We brief a North Carolina Court of Appeals decision, giving careful application to an exclusion for intentional acts, which the insurer used to deny the duty to defend as well as to indemnify. In a second Court of Appeals case, an insurer is found to have engaged in an unfair and deceptive trade practice because of its handling of a payment to a lienholder, which also impaired the rights of a pro se liability claimant.  The insurer had issued a single, settlement check with joint payees, instead of separate checks as required by statute.
A Federal District Court, applying North Carolina law, holds that a declaratory judgment action brought by professional liability insurer, was not bound by the terms of the settlement of the underlying professional liability claim, which contained a forum selection clause in favor of a state court. So it appears that North Carolina Federal Courts are willing to act on declaratory judgments – a position that differs from developing experiences in several other states we work in.
The South Carolina Supreme Court has issued an important opinion regarding the validity of reservation of rights letters, holding that a reservation of rights letter which merely cut-and-pasted parts of the insurance policy wordings, and stated generically that rights to deny were reserved, was not sufficient to preserve the right to contest coverage. We have long practiced narrative discussion of facts, wordings, and conclusions from the application of facts to wordings, in our reservation of rights letters and suggest that you review the quality of your coverage counsel’s work in this regard if you wish to reliably reserve rights in South Carolina – and most other states.
A Federal District Court, applying South Carolina law, has visited a corner of insurance coverage law which arises repeatedly: Where the harm suffered by the plaintiff is due to an excluded act of an employee of the insured, might the claim nonetheless be covered, if the employer is found to have negligently supervised the employee who caused the plaintiff’s harm? (This is but one iteration of an allegedly covered cause, “sitting on top” of a clearly excluded cause of loss.) This court concluded that because the negligent supervision is not actionable without the excluded occurrence (here assault and battery), the claim “arises from” the assault and battery and therefore the negligent supervision claim is also excluded.
We also digest cases addressing whether an employer-owned vehicle is a “temporary substitute vehicle” for coverage under a personal lines auto policy; another addressing whether a UM/UIM insurer was in bad faith for contesting a claim; and a third addressing whether claims handling practices should toll the three-year statute of limitations for coverage disputes.
Click here for our Case Notes for both states (26 pages).
Click here for North Carolina only (9 pages).
Click here for South Carolina only (18 pages).

Click here to go to the Evans & Co. law firm website for firm information and access to prior case digests.

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