Traynum v. Scavens

416 S.C. 197

786 S.E.2d 115

Loretta TRAYNUM and Leonard Traynum, Appellants,

v.Cynthia SCAVENS and Progressive Direct Insurance Co., Respondents.

Appellate Case No. 2013–002797.

No. 27629.

Supreme Court of South Carolina.

Heard Dec. 3, 2015.

Decided April 20, 2016.

Rehearing Denied June 17, 2016.

Blake A. Hewitt and John S. Nichols, both of Bluestein, Nichols, Thompson & Delgado, L.L.C., of Columbia, and Tom Young, Jr., of Law Offices of Tom Young, Jr., P.C., of Aiken, for appellants.

J.R. Murphy and Wesley B. Sawyer, both of Murphy & Grantland, P.A., of Columbia, for respondents.

David C. Marshall and R. Hawthorne Barrett, both of Turner Padget Graham & Laney, P.A., of Columbia, for Amicus Curiae, Property Casualty Insurers Association of America.

Justice KITTREDGE.

Loretta Traynum and Leonard Traynum (collectively, Appellants) appeal the trial court's grant of summary judgment to Respondent Progressive Direct Insurance Co. (Progressive), arguing the trial court incorrectly held that Progressive made a meaningful offer of underinsured motorist (UIM) coverage via its website. We affirm.

I.

In April 2007, Loretta Traynum (Traynum) purchased an automobile insurance policy from Progressive through Progressive's website. Instead of selecting one of the preset packages Progressive offered, all of which contained UIM coverage by default, Traynum created a custom package which did not include UIM coverage. Traynum also increased the preset deductibles for comprehensive and collision coverages. The result of these changes was a lower monthly premium. Traynum then electronically signed a form acknowledging Progressive offered her optional UIM coverage and that she rejected that coverage.

Thereafter, in November 2007, Traynum and Cynthia Scavens were involved in an automobile accident, from which Appellants claimed more than $175,000 in damages. Appellants brought claims against Scavens for negligence and loss of consortium, which were settled for $100,000, the limits of Scavens's liability coverage. As the settlement did not fully satisfy Appellants' damages, Appellants also brought a declaratory judgment action against Progressive claiming Progressive did not make a meaningful offer of UIM coverage to Traynum, as required by law, and asking the court to reform Traynum's policy to include UIM coverage in the amount of the policy's liability limits.¹

Appellants and Progressive filed cross-motions for summary judgment. Progressive noted it made an offer of UIM coverage to Traynum on its website and Traynum electronically signed a form rejecting that offer, while Appellants argued the offer was insufficient and therefore Traynum's rejection of UIM coverage was ineffective. The trial court granted Progressive's motion for summary judgment, concluding that Progressive made a meaningful offer of UIM coverage to Traynum, which she knowingly rejected. Appellants contend this was error and ask this Court to reform Traynum's policy to include UIM coverage. We decline to do so.

II.

A.

“An appellate court reviews the granting of summary judgment under the same standard applied by the trial court....” Quail Hill, L.L.C. v. Cnty. of Richland, 387 S.C. 223, 235, 692 S.E.2d 499, 505 (2010) (citing Brockbank v. Best Capital Corp., 341 S.C. 372, 379, 534 S.E.2d 688, 692 (2000) ). “[A] trial court may grant a motion for summary judgment ‘if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.’ ” Id. at 234, 692 S.E.2d at 505 (quoting Rule 56(c), SCRCP ).

Appellants' claim against Progressive is entirely predicated upon the allegation that Progressive's offer of UIM coverage was inadequate. When there is no factual dispute about its content or form, whether an offer of UIM coverage is sufficient is a question of law. See Wiegand v. U.S. Auto. Ass'n, 391 S.C. 159, 163, 705 S.E.2d 432, 434 (2011). “Appellate courts may decide questions of law with no particular deference to the [trial] court's findings.” Wachovia Bank, N.A. v. Blackburn, 407 S.C. 321, 328, 755 S.E.2d 437, 441 (2014) (citing Verenes v. Alvanos, 387 S.C. 11, 15, 690 S.E.2d 771, 772–73 (2010) ).

B.

In South Carolina, insurers must “offer, at the option of the insured, [UIM] coverage up to the limits of the insured liability coverage.” S.C.Code Ann. § 38–77–160 (2015). In the seminal case of State Farm Mutual Automobile Insurance Co. v. Wannamaker, this Court held that “the statute mandates the insured to be provided with adequate information, and in such a manner, as to allow the insured to make an intelligent decision of whether to accept or reject the coverage.” 291 S.C. 518, 521, 354 S.E.2d 555, 556 (1987). Under Wannamaker, for an offer of UIM coverage to be valid,

(1) the insurer's notification process must be commercially reasonable, whether oral or in writing; (2) the insurer must specify the limits of optional coverage and not merely offer additional coverage in general terms; (3) the insurer must intelligibly advise the insured of the nature of the optional coverage; and (4) the insured must be told that optional coverages are available for an additional premium.

Id. at 521, 354 S.E.2d at 556 (citing Hastings v. United Pac. Ins. Co., 318 N.W.2d 849 (Minn.1982) ). This amounts to a requirement that, to be valid, an offer of UIM coverage must be “a meaningful one.” Id. at 522, 354 S.E.2d at 557. “If the insurer fails to comply with its duty to make a meaningful offer, the policy will be reformed by operation of law to include UIM coverage up to the limits of liability insurance carried by the insured.” Ray v. Austin, 388 S.C. 605, 611, 698 S.E.2d 208, 212 (2010) (citing Butler v. Unisun Ins. Co., 323 S.C. 402, 405, 475 S.E.2d 758, 760 (1996) ).

After Wannamaker , the General Assembly enacted section 38–77–350 of the South Carolina Code as a safe-harbor provision, creating a conclusive presumption of a meaningful offer of UIM coverage under certain conditions. See, e.g., id. at 611, 698 S.E.2d at 212 (noting that compliance with section 38–77–350 creates “a presumption that a meaningful offer of UIM coverage has been made”) ((citing S.C.Code Ann. § 38–77–350(A) –(B) (2015))). Subsection (A) requires the Department of Insurance (the Department) to promulgate a form for insurers to use when making the required offer of optional coverages to new applicants, which must include

(1) a brief and concise explanation of the coverage;

(2) a list of available limits and the range of premiums for the limits;

(3) a space to mark whether the insured chooses to accept or reject the coverage and a space to state the limits of coverage the insured desires;

(4) a space for the insured to sign the form that acknowledges that the insured has been offered the optional coverages; [and]

(5) the mailing address and telephone number of the insurance department that the applicant may contact if the applicant has questions that the insurance agent is unable to answer.

S.C.Code Ann. § 38–77–350(A)(1)–(5). Subsection (B) states,

If this form is signed by the named insured, after it has been completed by an insurance producer or a representative of the insurer, it is conclusively presumed that there was an informed, knowing selection of coverage and neither the insurance company nor an insurance agent is liable to the named insured or another insured under the policy for the insured's failure to purchase optional coverage or higher limits.

Id. § 38–77–350(B) (emphasis added). Our precedents thus recognize that an insurer can establish it made a meaningful offer of UIM coverage by proving either it is entitled to the conclusive presumption of section 38–77–350(B) or it satisfied the requirements of Wannamaker. See, e.g., Ray, 388 S.C. at 612, 698 S.E.2d at 212 (“Even where the insurer is not entitled to the statutory presumption that a meaningful offer of UIM coverage was made, the insurer can still demonstrate that a meaningful offer of UIM coverage was made to the insured under Wannamaker .” (citing Floyd v. Nationwide Mut. Ins. Co., 367 S.C. 253, 264, 626 S.E.2d 6, 12 (2005) )).

C.

Appellants acknowledge they are not contesting the content of Progressive's offer of UIM coverage, but rather the method by which the offer was communicated to and rejected by Traynum through Progressive's website. Because the transaction occurred online, it is governed by South Carolina's version of the Uniform Electronic Transactions Act (the UETA).²

Under the UETA, “[a]n electronic signature satisfies a law requiring a signature.” S.C.Code Ann. § 26–6–70(D) (2007). The UETA also allows offers to be communicated online, declaring that

[i]f parties agree to conduct a transaction by electronic means and a law requires a person to provide, send, or deliver information in writing to another person, the requirement is satisfied if the information is provided, sent, or delivered in an electronic record capable of retention by the recipient at the time of receipt.

Id. § 26–6–80(A) (2007). Moreover, the UETA endorses automated transactions between an “electronic agent”³ of a company and a consumer:

In an automated transaction:

....

... a contract may be formed by the interaction of an electronic agent and an individual, ... including by an interaction in which the individual performs actions that the individual is free to refuse to perform and which the individual knows or has reason to know will cause the electronic agent to complete the transaction or performance....

Id. § 26–6–140 (2007).

Below, we analyze Appellants' arguments consistently with the purpose and provisions of the UETA.

III.

Appellants contend the trial court erred in granting Progressive summary judgment because Progressive's website was confusing and not designed to effectively communicate the offer of UIM coverage to Traynum. Therefore, Appellants argue, Progressive was not entitled...