ORDER

TERRY L. WOOTEN, District Judge.

This matter is currently before the Court on Defendant Auto-Owner's (hereinafter "Auto-Owners" or "Defendant") pending motion for summary judgment. Plaintiff filed the instant action on March 19, 2009 based on diversity jurisdiction pursuant to 28 U.S.C. § 1332. (Doc. # 1). On August 26, 2010, Defendant filed a motion for summary judgment. (Doc. # 48). Plaintiff filed a response in opposition to Defendant's motion for summary judgment on September 24, 2010. (Doc. #55). On October 4, 2010, Defendant filed a reply to Plaintiff's response in opposition. (Doc. # 57). The Court heard oral argument on this motion from counsel on October 15, 2010. For the reasons set forth in this Order, Defendant's motion for summary judgment is granted as outlined herein.

Procedural History

On May 31, 2002 Plaintiff Calvin Collins (hereinafter "Plaintiff" or "Collins") was involved in an automobile accident with Mark Frasier who was an uninsured motorist.1 At the time of the accident between Collins and Frasier, Collins had uninsured motorist (UM) coverage with Auto-Owners. The Plaintiff had three cars insured with Auto-Owners each with $500,000 UM coverage for total UM coverage of $1,500,000.

In 2004, the Plaintiff filed suit against Frasier in Florence County. This lawsuit was assigned Civil Action No. 2004-CP-21-488. In May of 2006, the case was tried before a jury. The trial lasted an entire week and both parties made directed verdict motions which were denied by the state trial court. On Friday, May 19, 2006, the jury returned a verdict for the Defendant Frasier. The Plaintiff then filed an appeal to the South Carolina Court of Appeals. In 2008, the South Carolina Court of Appeals issued an opinion in favor of Frasier. Collins v. Frasier, 378 S.C. 249, 662 S.E.2d 464 (S.C.App.2008). The Plaintiff then filed a petition for writ of certiorari to the South Carolina Supreme Court. The petition was denied.

This lawsuit against Auto-Owners was initially filed in state court in April of 2006, shortly before the trial of Collins v. Frasier. Auto-Owners removed the case to Federal Court based on diversity jurisdiction. In September of 2007, the case was dismissed without prejudice.2 After the South Carolina Supreme Court denied certiorari to review the Court of Appeals' decision, this lawsuit was re-filed in Federal Court in March of 2009. The complaint alleges the Plaintiff made a claim with Auto-Owners for payment of UM coverage, that Auto-Owners refused to make full payment under the UM coverage and that Auto-Owners wrongfully denied benefits due under the coverage. The Complaint further alleges that Auto-Owners' "actions and failures to act were unreasonable, negligent, arbitrary, capricious, in bad faith, and in breach of its duty of good faith and fair dealing in the following particulars, to-wit: (a) In failing to promptly and reasonably compromise, settle, or pay the uninsured motorist claim; (b) In failing to evaluate, investigate, and value the uninsured motorist claim honestly, reasonably, and in good faith; (c) In failing to offer the Plaintiff their honest and good faith valuation of the uninsured motorist claim; (d) In failing to promptly admit the amount of uninsured motorist coverage limits applicable."

Facts

During the Collins v. Frasier litigation, correspondence relevant to the issues in this case was exchanged between counsel for the Plaintiff and counsel for the Defendant Frasier (Attorney Michael Nunn), as well as in-house counsel for Auto-Owners (Attorney Kathleen Lopilato).3 In correspondence dated February 16, 2006, Plaintiff's counsel wrote attorney Nunn noting:

Plaintiff indicates that after this correspondence, a memo to Kathleen Lopilato was written by Auto-Owners' adjuster, Lorraine Frederick on March 1, 2006, indicating:

On April 5, 2006, Plaintiff's counsel wrote Attorney Nunn another letter:

In correspondence dated April 21, 2006 and addressed to Attorney Nunn, Plaintiff's counsel indicated:

In correspondence dated April 25, 2006, Attorney Lopilato wrote Plaintiff's counsel the following:

Plaintiff's counsel responded to Attorney Lopilato on May 3, 2006:

Thereafter, on May 4, 2006, Lopilato wrote the following (set forth in part):

Finally, on May 9, 2006 Plaintiff's counsel sent the following correspondence to Attorney Lopilato:

This correspondence between the parties continued up until the eve of trial. The state court case of Collins v. Frasier proceeded to trial and was tried beginning on May 15, 2006. The Jury returned a defense verdict, after finding Frasier suffered a sudden, unforeseeable incapacity to operate his vehicle. See Collins v. Frasier, 378 S.C. 249, 662 S.E.2d 464, 465 (S.C.Ct.App.2008). The verdict was affirmed on appeal. After certiorari was denied by the South Carolina Supreme Court on February 19, 2009, the instant case was filed on March 19, 2009.

Summary Judgment Standard

Pursuant to Federal Rule of Civil Procedure 56, summary judgment should be granted when the pleadings, responses to discovery, and the record reveal that "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." Charbonnages de France v. Smith, 597 F.2d 406 (4th Cir.1979). Once the movant has met its burden, the non-moving party must come forward with specific facts demonstrating a genuine issue for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

A genuine issue exists "if the evidence is such that a reasonable jury could return a verdict for the non-moving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). However, the party opposing summary judgment may not rest upon mere allegations or denials and, in any event, a "mere scintilla of evidence" is insufficient to overcome summary judgment. Id. at 249-50, 106 S.Ct. 2505.

When considering summary judgment motions, courts must view the facts and the inferences therefrom in the light most favorable to the party opposing the motion. Id. at 255, 106 S.Ct. 2505; Miltier v. Beorn, 896 F.2d 848 (4th Cir.1990); Cole v. Cole, 633 F.2d 1083 (4th Cir.1980). Indeed, summary judgment is only proper "[w]here the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there [being] no genuine issue for trial." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (internal quotations omitted).

Law/Analysis

As to Plaintiff's first cause of action for breach of contract, Auto-Owners asserts that it is entitled to summary judgment because it has not breached the contract of insurance as there is no claim for insurance proceeds owed under the insurance contract. Defendant asserts that there is no contractual duty to pay a UM claim before the insured obtains a judgment against the tortfeasor: "recovery under the uninsured endorsement is subject to the condition that the insured establish legal liability on the part of the uninsured motorist." Lawson v. Porter, 256 S.C. 65, 180 S.E.2d 643, 644 (1971). Defendant indicates that the Plaintiff has never obtained a judgment against the uninsured motorist Frasier as the jury returned a verdict for him after finding that he suffered a sudden, unforeseeable incapacity to operate his vehicle. Collins v. Frasier, 378 S.C. 249, 662 S.E.2d 464, 465 (S.C.App. 2008). Additionally, where an underlying tort action is decided adversely to the insured, the insured is not entitled to UIM coverage because the insured is not entitled to any damages from the driver of the underinsured motor vehicle. McDill v. Nationwide Mutual Insurance Company, 368 S.C. 29, 627 S.E.2d 749 (S.C.App. 2006).4

Defendant asserts that Plaintiff's own expert witness has conceded that no amount is owed under the contract of insurance. This witness, Kelly Morgan, testified that:

The Plaintiff's expert further testified that:

Defendant asserts that Morgan's testimony indicates that the purpose of the uninsured motorist trial was to determine what amount, if anything, was contractually owed by Auto-Owners on the uninsured motorist claim. (Morgan Deposition, p. 98). Defendant argues that because it is undisputed Auto-Owners has not breached the contract of insurance as it owes nothing on the Plaintiff's UM claim, Auto-Owners is entitled to summary judgment as to the Plaintiff's first cause of action for breach of contract.

Plaintiff opposes Defendant's motion for summary judgment as to their first cause of action and indicates that in its review it finds no statement anywhere in the policy that indicates that a judgment against the uninsured driver is necessary before the carrier becomes contractually obligated to pay their insured's claims for Uninsured Motorist coverage. Plaintiff argues that an insurance carrier is obligated to pay uninsured claims, irrespective of whether there is a judgment, in those amounts which the carrier agrees that their insured is legally entitled to recover. Plaintiff asserts that the following policy language is relevant:

The policy at issue contains the following language:

Plaintiff asserts that the Defendant carrier in this case agreed that the Plaintiff was legally entitled to recover One Hundred Fifty Thousand ($150,000.00) Dollars, because they valued the claim at that amount internally. (Ex. 1, AO-00643). Accordingly, Plaintiff asserts that pursuant to the contract, they were obligated to pay that internal valuation. Plaintiff's position is that when Auto-Owners valued the claim at One Hundred Fifty Thousand ($150,000.00) Dollars but refused to offer that value to its insured, or to even acknowledge that valuation, they breached the express and implied requirements of their contract. The Plaintiff relies, inter alia, on the following cases for support: Nichols v. State Farm, 279 S.C. 336, 306 S.E.2d 616 (S.C.1983); Myers v. State Farm, 950 F.Supp. 148 (D.S.C.1997); Tadlock Painting Co. v. Maryland Casualty, 322 S.C. 498, 473 S.E.2d 52 (1996); Ocean Winds v. Auto-Owners, 241 F.Supp.2d 572 (D.S.C. 2002); Newport v. USAA, 2000 OK 59, 11 P.3d 190 (2000); and Howard v. State Farm, 316 S.C. 445, 450 S.E.2d 582 (1994).

The Defendant responds to Plaintiff's arguments and asserts that there is no South Carolina case or statute which imposes a duty upon an insurer to extend a settlement offer of the insurer's highest evaluation of a UM claim. Defendant also asserts that there is no deposition testimony or correspondence wherein Auto-Owners ever agreed that Plaintiff was legally entitled to recover any amount of UM benefits. Defendant reiterates that Plaintiff's own expert conceded the amount Auto-Owners owes on the UM claim is "zero as per trial" (Morgan Deposition, p. 98) and that contractually after the trial Auto-Owners owed nothing. (Morgan Deposition, p. 99). Finally, Defendant asserts that because the jury returned a verdict for Frasier in the Collins v. Frasier trial, the Plaintiff is not legally entitled to recover damages from Frasier, the owner and operator of an uninsured automobile. Defendant relies on the case of Snyder v. State Farm, 586 F.Supp.2d 453 (2008).

After careful review of the arguments by both parties, the insurance contract at issue, as well as the relevant case law, this Court finds Defendant's position to be sufficiently persuasive. In the case of Lawson v. Porter, 180 S.E.2d 643 (1971), the Supreme Court of South Carolina indicated that "[r]ecovery under the uninsured endorsement is subject to the condition that the insured establish legal liability on the part of the uninsured motorist." In a more recent South Carolina Court of Appeals case, McDill v. Nationwide Mut. Ins. Co., 368 S.C. 29, 627 S.E.2d 749 (2006),5 this Court finds the analysis done by the South Carolina Court of Appeals to be instructive. In that case, a mother and father whose son was injured in automobile accident brought action against insurers to reform two insurance policies to include underinsured motorist (UIM) coverage. The trial court entered judgment reforming the policies on ground that insurers did not make a meaningful offer of UIM coverage. The Insurers appealed. The appeal was held in abeyance pending the resolution of a separate tort action against the driver and owner of the other vehicle involved in the accident, among others, which ended in a judgment in favor of the defendants. After the resolution of the tort action, the Court of Appeals held that the issue of whether the policies at issue should be reformed to include underinsured motorist (UIM) coverage was mooted by entry of judgment against mother and son in their tort action against driver and owner of other vehicle involved in accident. The Court noted that:

This Court has also reviewed the case of Snyder v. State Farm Mut. Automobile Ins. Co., 586 F.Supp.2d 453 (2008), where the Court granted summary judgment on a breach of contract claim where there was no provision in the contract between plaintiff and defendant that required defendant to disburse UIM benefits before a formal entry of judgment against the tortfeasor in excess of his liability coverage limits. The Snyder Court noted that the plaintiff's breach of contract claim was virtually identical to the grounds for plaintiff's bad faith failure to pay benefits claim. In finding that plaintiff's breach of contract failed as a matter of law, the Snyder Court noted that the plaintiff could not point to a specific provision of the contract that defendant had violated, nor could it establish an issue of material fact to support his claim that defendant violated its contractual duty to deal with him in good faith. This Court reaches a similar conclusion. In light of the reasoning of these cases and based on the arguments made by Defendant, which the Court finds to be sufficiently persuasive, this Court finds that Plaintiff's breach of contract claim fails as a matter of law.6

The Court will now address Plaintiff's second cause of action for bad faith refusal to pay an insurance claim. "[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., 279 S.C. 336, 340, 306 S.E.2d 616, 619 (1983). Furthermore, a bad faith claim may exist even in the absence of any violation of an insurance contract provision, as "the benefits due an insured are not limited solely by those expressly set out in the contract." Tadlock Painting Co. v. Maryland Cas. Co., 322 S.C. 498, 503, 473 S.E.2d 52, 55 (1996). The elements of a bad faith refusal to pay action are: (1) the existence of a contract of insurance between the parties; (2) refusal by the insurer to pay benefits due under the contract; (3) resulting from the insurer's bad faith or unreasonable action; and (4) causing damage to the insured. Howard v. State Farm Mut. Auto. Ins. Co., 316 S.C. 445, 451, 450 S.E.2d 582, 586 (1994).

Auto-Owners asserts that it is entitled to summary judgment on the Plaintiff's second cause of action for bad faith refusal to pay because the Plaintiff cannot prove the second element of this claim, that being, refusal of the insurer to pay benefits due under the contract. Auto-Owners argues that the Plaintiff's own expert witness concedes that it has not refused to pay benefits due under the contract of insurance. Additionally, Auto-Owners asserts that the defense verdict in the Collins v. Frasier trial means that Auto-Owners owes no UM benefits to the Plaintiff. Accordingly, Auto-Owners asserts that it has not refused to pay benefits due under the contract of insurance. Auto-Owners also argues that it is entitled to summary judgment on the bad faith cause of action because, even construing the facts most strongly in favor of the Plaintiff, Auto-Owners did not act in bad faith or unreasonably. Finally, Auto-Owners asserts that it is entitled to summary judgment because it has not caused the Plaintiff any damages.7

Plaintiff asserts that an uninsured motorist carrier owes their insured a duty of honesty, good faith and fair dealing; and that such duty requires the carrier to do an honest internal valuation of the claim and pay the honest internal valuation to its insured. Plaintiff argues that the failure to do so constitutes bad faith. Plaintiff suggests that the evidence in the claim file presents a triable genuine issue of material fact as to whether Auto-Owners offered their insured, the Plaintiff, their honest internal valuation of his first party uninsured claim. Plaintiff argues that an email from supervisor Kathleen Lopilato to her subordinate Lorraine Frederick dated August 23, 2005, in which Ms. Lopilato indicated "I don't necessarily disagree with your number of $150,000.00 to resolve," establishes a genuine issue of material fact as to whether Auto-Owners valued the Plaintiff's claim at One Hundred Fifty Thousand ($150,000.00) Dollars, but refused to offer it to him. Plaintiff asserts that this correspondence establishes that the carrier valued the claim at least at One Hundred Fifty Thousand ($150,000.00) Dollars and refused to offer their insured more than One Hundred Thousand ($100,000.00) Dollars.

If there is a reasonable ground for contesting a claim there is no bad faith. Crossley v. State Farm Mutual Automobile Insurance Company, 307 S.C. 354, 415 S.E.2d 393 (1992). See also Snyder v. State Farm Mutual Automobile Ins. Co., 586 F.Supp.2d 453 (2008). By logical extension, if there is a reasonable ground for offering less than the full amount demanded on a claim, then there is no bad faith in negotiations. Wilkins v. State Farm Mutual Ins. Co., 2008 WL 2690240 (D.S.C. 2008). Whether an offer is reasonable and made in good faith must be tested based on what was known at the time. Id. It must also consider the very nature of negotiations. As explained in the opinion in Snyder v. State Farm Mutual Automobile Ins. Co., 586 F.Supp.2d 453, 460 (2008):

The Court in Snyder also noted that "a duty to deal in good faith does not necessarily entail a duty to make a settlement offer." Id. at 458.

The initial offer made in this case was not insignificant. Additionally, as supported by the state court verdict in the Collins v. Frasier litigation, Defendant had at least a reasonable basis for raising questions as to liability and damages.8 As asserted by Defendant, information gathered by Auto-Owners' attorney Mike Nunn revealed that Frasier had a legitimate defense to the issue of liability based on Frasier's sudden incapacity. (Nunn Affidavit, ¶ 6) The Plaintiff's expert witness concedes that in Collins v. Frasier case there could be reasonable differences of opinion about liability. (Morgan Deposition, p. 101). In addition to issues of liability, other issues concerned the amount of the Plaintiff's damages, as information gathered by Nunn indicated the Plaintiff had substantial preexisting conditions unrelated to the accident with Frasier. (Nunn Affidavit, ¶¶ 7, 8). Under these circumstances, there was room to debate the value of Plaintiff's claim. Despite having a legitimate question about whether Frasier had any liability to the Plaintiff and legitimate issues on whether Frasier caused the Plaintiff damages, Auto-Owners nonetheless offered $100,000 to settle the UM claim. In response the Plaintiff's demand was never less than $1 million.9

The Plaintiff's expert's opinion on the range of Calvin Collins' case is much closer to the amount offered by Auto Owners ($100,000) than the Plaintiff's lowest settlement demand of $1 million—"I think [Calvin Collins' case] had a range probably of $125,000 to maybe $200,000." (Morgan Deposition, p. 91). Morgan furthered testified that:

(Morgan Deposition, p. 92)

This testimony establishes the Plaintiff's lowest settlement offer exceeded the range of value of Calvin Collins' case. Morgan further testified that:

(Morgan Deposition, pp. 92, 93)

Auto-Owners argues that this testimony establishes the Plaintiff's lowest settlement offer was unreasonable. Finally, Morgan conceded Auto-Owners' initial offer was reasonable:

(Morgan Deposition, p. 117).

Given the circumstances outlined herein this Court concludes that the value of Plaintiff's claim could reasonably be debated. In fact, this Court believes that the judgment in the Collins v. Frasier case is evidence that there was a reasonable basis to dispute exactly what this case was worth. Because the record establishes that there was a reasonable ground for contesting this claim, and by extension, a reasonable ground for offering less than the full amount demanded on the claim, this Court is not persuaded that there was any bad faith. Additionally, the Court finds insufficient evidence in the record that the insurance company manipulated or misvalued this case at an amount of $150,000. This Court has considered the substantial initial offer made by Auto-Owners and the substantial difference between the parties outstanding demand/offer figures. The Court is not persuaded that under the existing legal authority (and based on the facts of this case) that Defendant Auto-Owners was required to extend a settlement offer of $150,000 as its highest evaluation of the UM claim after its initial offer of $100,000, in light of the fact that the parties remained at least $900,000 dollars a part. After careful consideration of the parties' respective positions as well as the case law relevant to these issues, the Court finds that the conduct of Defendant Auto-Owners was reasonable under the circumstances of this case. The Court finds Defendant's position in this case to be sufficiently persuasive and concludes that Plaintiff has not established an issue of material fact as to his claim for bad faith refusal to pay. This Court determines that as a matter of law that Auto-Owners did not act in bad faith.10

Conclusion

Based on the foregoing, this Court concludes that Defendant Auto-Owners is entitled to summary judgment. Accordingly, for the foregoing reasons, the undersigned GRANTS Defendant Auto-Owner's motion for summary judgment as outlined herein.

IT IS SO ORDERED.