Heritage Decision Fallout Begins as Carrier DENIED Intervention…

The fallout has already begun from the recent South Carolina Supreme Court decision Harleysville Group Ins.v. Heritage Comms., Inc., Op. No. 27698 (S.C. Sup.Ct. field Jan. 11, 2017), which we wrote about a few weeks ago (see Don’t Write Another Reservation of Rights Letter Before Reading This Opinion! Posted January 18, 2017).  We understand that in a hearing on a Motion to Intervene last week, a South Carolina trial court denied the Motion, relying in part on Heritage in reaching its decision.

While the Order has yet to be signed, we have been informed that the Court’s denial of the Motion rested heavily on the recent Heritage decision.  As we understand it, the court held that the Heritage decision indicated a preference for general verdicts in a construction matter, even where this means that an insurer will be responsible for the all covered and non-covered claims in that verdict.  The trial court seemed to consider the potential conflict of interest where the insurer was attempting to both defend its insured and present special questions to the jury in an effort to deny possible indemnification following trial, which we understand it believed unfair to the insured.  Finally, the court seems to have noted that the insurer’s intervention would create a high likelihood of confusing the jury.  It is our understanding that the court concluded that intervention by the insurer was inappropriate, and denied the Motion, noting that a subsequent declaratory judgment action would be a more proper vehicle for asserting that the insured had no right to indemnification under the policy.

This is an interesting decision, as the insurer had asserted the right to intervene based on the ruling in Heritage.  As noted, however, the trial court read the decision differently, holding that it does not entitle the insurer to intervene in the underlying litigation to propound special interrogatories to the jury.  Whether other trial and appellate courts interpret the recent decision in a consistent manner or provide their own interpretation is something we will be watching closely in the coming months.

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